HUD REPOS. SecurityNational Mortgage Company

Transcription

1 HUD REPOS SecurityNational Mortgage Company

2 Appraisal Requirements Appraisals are ordered by the M&M contractor from an FHA appraiser. Utilities should be on at the time the appraisal is conducted. If not appraiser will note and you must have a PTD condition for the utilities to be turned on and all systems checked. This is to make sure there are no repairs needed on these areas. The appraiser, purchaser or mortgage lender can complete a systems check while utilities are activated. The mortgage lender should contact the M&M contractor to obtain a copy of the appraisal. You must use the appraisal from the M&M contractor. Mortgage lenders may order and the borrower may be charged for an updated appraisal only under the following circumstances:

3 If the M&M contractor s appraisal is more than 120 days old (for case numbers ordered on or after 4/1/2010). Per Mortgagee Letter : Effective immediately, with the exception of 203(k) as-repaired appraisals, when a buyer is using FHA financing to purchase a HUD REO property, the appraisal that was utilized in determining the list price will remain effective for purposes of obtaining the FHA-insured mortgage. A second appraisal may not be ordered simply to support a purchase price that is higher than the value on the current appraisal. A second appraisal can only be ordered to support a higher sales price if there are material deficiencies with the current appraisal or the current appraisal will not be valid on the date of contract ratification. The Direct Endorsement (DE) underwriter is responsible for determining if there are material deficiencies with respect to the current appraisal. In addition, the lender must document why a second appraisal was ordered and retain both appraisal copies in the loan file.

4 If the updated appraisal results in a lower as-is-value of the property, the purchaser will be given the opportunity to proceed with the transaction with no adjustment made to the sales price, requiring an additional cash investment by the borrower, or the borrower may withdraw their offer to purchase and receive a full refund of the earnest money. If the HUD REO property has a well and/or septic tank contact the M&M contractor to determine if an inspection has been performed and obtain a copy. If no tests have been ordered, mortgage lenders are responsible for ensuring that any test and certifications required are obtained. HUD REO Insurable, Insurable with Repair escrow, Uninsurable Insurable with repair escrow Purchasers are permitted to include in their mortgage an amount equal to 110% of the estimated cost of the repairs. This shows on purchase contract. Uninsurable estimate repairs over $5000

5 Sales Contract Requirements Sales contract must be fully executed (M&M contractor will sign as seller). Contract will specify the sales price, financing terms, amount of closing costs HUD will pay at settlement, the real estate commission HUD will pay, the closing date and any discount on the sales price that will be provided at settlement. In order to qualify for FHA-insured financing, the first block on line 4 of the sales contract, as well as the applicable block for the FHA program 203b,203b with repair escrow or 203k, must be checked. Only the actual amount of closing and financing costs will be paid by HUD at settlement (if listed on Line 5). Prepaid items may not be paid out of the amount listed on Line 5. Specified on Line 8 of the Sales Contract will be the percentage discount, if any, that will be applied to the sale price at settlement. The mortgage amount will be based on the discounted sales price.

6 Case Number Processing Mortgagees must obtain a new FHA case number for applications for FHAinsured financing involving REO properties. When entering the case info in FHA Connection, mortgagees should select Real Estate Owned for Processing Type. Was this case previously sold as a Property Disposition? - Should always be checked yes on REO properties Always complete the previous case number. digit of the previous case number. Enter an X as the last. Since an appraisal is not ordered by lender, do not complete the appraiser fields. If using M&M contractors appraisal order as REO without appraisal. If the REO is a condo, enter the condo ID.

7 Property Review Requirements If a repair escrow is approved a completed Form HUD-92300, Mortgagee s Assurance of Completion should be included in case binder and a completed form HUD-92051, Compliance Inspection Report must be included. See procedures for HUD Escrows.

8 Maximum Mortgage Amount Calculating the mortgage amount: complete the LT the same as for any other mortgage with the following exceptions: The base mortgage amount is computed to ensure the borrower is investing at least 3.5% per statutory requirement. Base loan amount should be noted in the remarks section The amount of the escrow repair is noted below the base mortgage amount (with escrow repair noted to the left) Where a discount on the sales price is being provided, the mortgage amount shall be based on the lesser of the as-is value or the discounted sales price, not the contract sales price. Maximum allowable financing for investors is 75% for one unit properties and 85% for two four unit properties

9 FHA Approved Escrows on HUD Owned Properties (HUD Repos) HUD will allow repair escrows to be financed in the new FHA loan amount on some REO properties. The purchase contract from HUD will address on line 4 if repair escrows are allowed. These guidelines should be followed: Mortgage lender requests the HUD appraisal from the M&M contractor. Appraisal should address what repairs are required and the cost to complete. Obtain a copy of the fully executed purchase contract from the M&M contractor. Purchase contract will list on line 4 the amount of the repair escrow that can be included in the mortgage. The repair escrow listed on line 4 of the purchase contract is 110% of the estimated cost of the repairs and must be used for the repairs specified in the property listing.

10 The repair escrow can be added into the loan amount. The maximum dollar amount to be eligible for FHA 203b financing is $5000 An escrow agreement for 110% of the cost of the repairs must be signed by all parties A completed form HUD-92300, Mortgage s Assurance of Completion will be included in the case binder A completed form HUD-92051, Compliance Inspection Report (final inspection) must be submitted after the completion of repairs. The Repair inspection must be performed by a qualified individual (but does not necessarily require an FHA Fee Inspector). DE underwriter determines the level of qualification necessary for the inspection.

11 The maximum escrow period is 60 days. The escrow amount must be approved by the underwriter. HUD Mortgagee Letter covers HUD Repos and the Good Neighbor program. HUD also now offers the $100 down program for all REO s. Contract should note that property is eligible for $100 down. SecurityNational Mortgage Company