Underwriter: Linda Breithaupt | Cell: 806-786-7767 | linda@rdhloans.com |
Linda lives in Lubbock and is our first and currently only underwriter. Resume Attached Here
FHA Underwriting: Red Diamond is pursuing it's Direct Endorsement Authority with HUD
Test Cases: 15 Files must be submitted to FHA within the next 12 months and deemed acceptable to FHA to issue our Direct Endorsement Authority. 5 of the test cases can be refinances, including streamline refinances.
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Red Diamond Home Loans FHA Delegated Underwriting Guidelines
Loan Parameters for FHA DE Test Cases:
- Important: Mike Rogers & Mike Porter will make the ultimate decision if a file should be underwritten as a delegated file or if it should be submitted to a non-delegated investor. For various reasons we may feel a loan needs to be submitted to our investors.
- Layered Risk: We would like to limit the amount of layered risk on these FHA delegated loans: Example: 96.5% LTV, 620 Fico, 50% DTI is pushing all our limits. These loans should be sent out for non-delegated underwriting.
- Minimum credit score must be 640
- Employment: No Self-Employed Borrowers
- LTV: Maximum Loan To Value will be 96.5%
- Variable Income: We may choose to not underwrite a file for delegated approval with variable income. The income used must be very clear to be approved as a test case file.
- W-2 Only: Full 2 year W-2 Employment History (New jobs may need to go non-delegated)
- Trusts or POA's: No Loans in a Trust or with a POA as a delegated loan.
- Collections: No loans with collections will be underwritten as a delegated file.
- Property Types: Single Family Detached Only-No Condo's | No Manufactured Housing | No Attached Town Homes | No Rural Properties
- Occupancy: Owner Occupied Only-No Second Homes
- Loan Type: Purchase or Rate Term Refinance Only
- Limited Refi's in the Test Cases: Only 2 FHA Streamline Refinances count toward test case files.
- Limited DTI: Maximum debt to income ratio must be 45% to reduce the amount of layered risk.
- One Property Max: Primary Residence Only, No Investment REO -Send Non-Del if they own a second property.
- Minimum loan amount: $150,000 (lower upon request)
- Citizenship: All borrowers must be US citizens
- Exceptions: Thes are possible but unlikely for delegated files. With strong compensating factors and reduced layered risk, we will look at a loan.
- Automated Underwriting: No Manual Underwriting on delegated files. Fannie Mae - DU Approved Eligible or Freddie Mac LPA Approved Only
- DE Underwriter: Linda will be a big help to you so feel free to reach out with questions or for assistance.
- Overlays: Red Diamond will underwrite to the Investor overlay guidelines.
- Investor Specific: If we add another delegated investor our Underwriters will underwrite specifically to the investor that we are committing the loan to so that all investor overlays are taken into consideration when the file is underwritten.
Loans not meeting these requirements can be sent through our non-delegated underwriting channel to any of our non-delegated investors.
Originating After A Forbearance is Complete
"Today, the Federal Housing Administration (FHA) published Mortgagee Letter (ML) 2020-30, FHA Underwriting Guidelines for Borrowers with Previous Mortgage Payment Forbearance. The ML informs mortgagees of underwriting guidelines for homeowners who were granted a mortgage forbearance due to the COVID-19 National Emergency. Additionally, this ML defines the requirements that borrowers must meet to request a new FHA-insured mortgage after successfully completing their mortgage payment forbearance period.
Borrowers granted mortgage payment forbearance may be eligible for a new FHA-insured mortgage provided they:
- continued to make regularly scheduled mortgage payments and the forbearance is terminated; or
- completed forbearance and made at least 12 consecutive monthly mortgage payments after forbearance or cash-out refinances; or
- completed forbearance and made at least three consecutive monthly mortgage payments after forbearance for purchase mortgages and no cash-out refinances; or
- completed forbearance and made less than three consecutive monthly mortgage payments after forbearance for credit qualifying streamline refinances.
Additionally, if a borrower entered into a modification agreement on an FHA mortgage, they must have made six payments under the modification to be eligible for a streamline refinance.
This guidance applies to single family forward mortgage programs only and updates requirements in the Single Family Housing Policy Handbook 4000.1 (SF Handbook) as indicated in the ML. These updates will be incorporated into the applicable sections of the SF Handbook in the coming months.
Quick Links:
- View Mortgagee Letter 2020-30 and all other archived Mortgagee Letters at: https://www.hud.gov/program_offices/administration/hudclips/letters/mortgagee
- Access the online or PDF versions of the Single Family Housing Policy Handbook 4000.1 at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh "
- Directly From the FHA.
STEPS TO UNDERWRITE DELEGATED FHA FILES IN ENCOMPASS:
Step 1: Processor Assigns the Underwriter - FHA Delegated Cases to Linda
When the Submittal milestone is ready to be completed, the processor assigns the loan to an underwriter.
Step 1: Underwriter Reviews the Loan File and Conditionally Approves or
- At the Conditional Approval milestone, the underwriter completes the following tasks.
- Reviews the loan application and associated borrower and loan information.
- Uses the Underwriting Conditions tab on the eFolder to review attached documents, including the credit, appraisal, and title reports.
- Underwriter updates the Underwriting Summary with key information related to the creditworthiness of the borrower and the property value.
- Creates, reviews, and clears conditions using the Underwriting Conditions tab on the eFolder.
- When analysis of the loan is complete, the underwriter can conditionally approve the loan, or reject the loan and return it to the previous (Submittal) milestone.
- Or, to return the loan to the previous milestone, the underwriter clicks Return File to Sender.
Step 2: Processor Completes Tasks for Resubmittal
- At the Resubmittal milestone, the processor uses the Underwriting Conditions tab on the eFolder to address open conditions.
- On the Underwriting Conditions tab, the processor reviews and addresses the requirements of each condition, marking the conditions as fulfilled.
- When the required conditions are satisfied, the processor resubmits the loan to the underwriter.
- On the Resubmittal worksheet, the processor assigns an underwriter, and then selects the Finished check box.
Step 3: Underwriter Reviews the Loan File and Gives Final Approval
- At the Approval milestone, the underwriter again uses the Underwriting Conditions tab to review and clear conditions.
- When the required conditions are satisfied, the underwriter approves the loan.
- On the Approval worksheet, the underwriter assigns a processor, and then selects the Finished check box.
With a Non-Delegated Sale the underwriting risk is transferred to the Investor & Underwriter for the file.
On a delegated sale Red Diamond retains some underwriting risk and provides the investor representations & warranties that the file meets all investor requirements. We must be very careful that it does meet all investor requirements.