FHA Loans

FHA recently announced several changes that will impact underwriting in several areas. These changes are effective April 1, 2012.

Here's a quick summary of these changes:

For self-employed borrowers: P&L statements are now required if the last business tax return is more than 3 months old; in addition, statements must be audited if P&L income is greater than the two year average, and the higher income is needed for qualification purposes. If the two year average income is sufficient for qualification purposes, the P&L is still required, but does not need to be an audited one.

For loans with disputed accounts that receive an "Accept" by TOTAL: These are not required to be referred to a DE underwriter for review as long as the total amount of combined balances (1) does not exceed $1,000 and (2) the dates of last activity are older than 2 years. If singular or combined balances total more than $1,000 they must be paid in full at or prior to closing, or provide proof of payment arrangements with 3 months of payments verified.

For collection accounts: If the total balances of all collection accounts are less than $1,000, the borrower is not required to pay them off as a condition of approval. If singular or combined balances total more than $1,000 they must be paid in full at or prior to closing, or provide proof of payment arrangements with 3 months of payments verified. Judgments must be paid unless payment arrangements have been made and 3 months of payments are verified.

For definitions: The following are now included in the definition of family member for the purposes of Identity of Interest transactions: Brother, Stepbrother, Sister, Stepsister, Uncle, and Aunt.

If you have any questions about these updates, and what they might mean, give me a call or send me an email and I'll be happy to discuss this or any other pertinent matters with you.


Sterling Campbell
First Mortgage Company

I take pride in the fact that the majority of my business is from clients and their referrals. I ask you to refer your family, friends and associates to me when they are ready to purchase, refinance or would like a complimentary Mortgage Consultation to make sure their mortgage is still working for them. The highest compliment I can receive is a referral from a friend.


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Sterling Campbell
First Mortgage Company
1365 Garden of Gods, STE 200
Colorado Springs, CO 80907

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