HomeBridge Bulletin 14-19 issued April 18, 2014 has been revised. Refer to the yellow highlight.
HUD Mortgagee Letter 2014-02, issued January 21, 2014, detailed HUD’s new requirements for manually underwritten FHA loans. HomeBridge overlays to HUD guidelines continue to apply.
Reserve Requirements – All Manually Underwritten Loans
All manually underwritten loans, regardless of DTI, are now subject to the following reserve requirements:
• 1-2 units: A minimum of 1 month of the total monthly mortgage payment (PITI + MIP). Previously FHA did not have a reserve requirement on 1-2 unit properties.
NOTE: FHA continues to require 3-4 units to require 3 months (PITI + MIP in reserves).
The new reserve requirement for 1-2 units applies to all manually underwritten loans with a case number assigned on or after April 21, 2014 (including case numbers re-issued when previous case number expired).
Exceeding 31%/43% DTI and Required Compensating Factors
The new manual underwriting requirements regarding maximum DTI and the applicable compensating factor requirement apply as follows:
• Case numbers assigned on or after April 21, 2014 (including case numbers re-issued when previous case number expired), and
• The DTI exceeds 31%/43% (if either ratio exceeds its maximum, e.g. 34%/41%, the new guidelines apply).
These new requirements do not apply if the DTI does not exceed 31%/43% or to non-credit qualifying Streamline refinance transactions.
HomeBridge limits manual underwriting to the following:
• The loan received an “Approve/Eligible