Written By: Bonnie Wilt-Hild, Op-Ed Writer
Change is good. It can be exciting and present new challenges that simply make life more interesting. This year has brought about many changes to the FHA mortgage insurance program, so it’s not surprising that I am going to discuss another one this week.
Need FHA Training? CLICK HERE: http://www.FHA-Classes.org
But before I start I would just like to say that there are just some distinguishing characteristic about FHA that made it not only different than conventional but simply FHA.
Take manual underwriting for instances, it’s just an FHA thing. Case numbers and CAIVRS also make the program special. Most importantly though, the one thing that sets FHA loans apart from all other loan types is the Mortgage Credit Analysis Worksheet. Be it convoluted and confusing it is what FHA Single Family mortgage programs are about.
Known to us die hard DE Underwriters as a MCAW, we love this document. Just like eyeliner, it makes us feel powerful. There is nothing like marking up the MCAW when you are finished underwriting a case, a scratch through here, mark up there and comments, love those, just write all over the place.
The MCAW is the end all document for FHA insured mortgages and as of May 22, 2008, in conjunction with mortgagee letter 2008-15, it will also become a thing of the past. That’s correct, the Mortgage Credit Analysis Worksheet will be replaced with a new HUD form 92900-LT, which is the new FHA Loan Transmittal. I am not quite sure if I like the name yet, but I am sure I will adjust as will everyone else and for those of you who will bid it good riddance as oppose to farewell, understand we are loosing a piece of history.
Now like I said, change is good and all things do come to an end. This change is no different. There is no doubt that completing the new LT will be far less time consuming and a lot less confusing for new DE underwriters not to mention less intimidating from a visual standpoint. But there are some drawbacks.
Unlike the MCAW, which walked the underwriter through every calculation and made it almost impossible to miscalculate the maximum mortgage amount, the new LT is not quite as helpful. It is now the underwriter’s responsibility to make sure that the borrower has met their minimum required investment and the LT isn’t going to provide the guidance that the MCAW did for you to get there.
Mortgagee Letter 2008-15 reminds us that “Lenders are reminded that they are still responsible for calculating the mortgage amount in accordance with existing FHA statutory requirements and documenting that calculation in the loan origination file”. So in other words, everyone is still on the hook for making sure that the borrowers minimum required investment has been met where it pertains to down payment and allowable closing costs, but like I said the new document isn’t walking anyone through the calculation.
There is further guidance to the document when using it in conjunction with the 203k, which all 203k underwriters should read. Additionally, the mortgagee letter also notes some changes to the 92900a, which will also take effect as of October 1, 2008, so it would be a good idea to check the mortgagee letter out if you have not already.
Below is a sample of the new LT. I think we will all agree that it is not nearly as busy as the MCAW, but it also seems to lack the FHA feel. Be careful with your loan amount when using this document because it is now all up to the underwriter. Good luck!
Need FHA Training? CLICK HERE: http://www.FHA-Classes.org
About The Author
Bonnie Wilt-Hild - As an op-ed writer, Bonnie has held many mortgage underwriting positions, including Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans".
