Written By: Joan Ewing, Op-Ed Writer
Hello Everybody – I hope everybody is keeping busy these days. The refi market is definitely picking up and I see many more processor and underwriting jobs on CareerBuilder and Monster. In fact, I received calls from four headhunters in the past week asking if I were interested in a FHA Underwriting job; however, since I am currently employed and I am currently happy in my job, I decided to pass; however, I asked they please keep me in mind – because you never know. Those of you who know processors looking for jobs might suggest they post their resume on CareerBuilder and Monster.
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Since I have been unable to find any new earth-shattering news regarding FHA, I thought it might be a good idea to go over some basic processing that I have found there are always questions. We will only cover the different statuses of borrowers in the transaction today.
Borrowers, Co-Borrowers and Co-Signers – Usually there are no questions regarding a borrower and co-borrower; the confusion usually is associated with co-signers on a mortgage. Let’s try and set this straight –Borrowers and co-borrowers take title to the property and are obligated on the mortgage note. All income, assets, liabilities and credit history are taken into account to determine if the borrowers meet the guidelines.
Co-signers – do NOT hold ownership interest in the property. However, they are responsible for repaying the mortgage should the borrower and co-borrower not meet their obligation. The co-signer’s income, assets, liabilities and credit history are considered in determining whether to give the borrowers the mortgage. The co-signer must also complete and sign the loan application.
FHA does not permit anyone to take an ownership interest in the property at settlement without signing the note and security instruments.
Another area that always raises questions is whether a Non-Permanent Resident Alien may purchase a property. According to FHA if the non-permanent resident alien is purchasing a primary residence and has a valid Social Security Card and the borrower is eligible to work in the USA, the borrower may purchase a property.
However, if the authorization for temporary residency expires within one year and a history of residency renewals exists, we may assume continuation of living in the USA will continue. If there are no prior renewals, the lender must determine the likelihood of renewal, based on information received from Immigration Services.
Non-US Citizens with no lawful residency in the US are NOT eligible for an FHA loan.
Questions seem to arise when an applicant is married and the spouse is not on the mortgage nor will be on title. This area of concern is dictated by State law. Some states in order to perfect a valid and enforceable first lien, the non-purchasing may be required to sign either the security instrument or docs stating that he or she is relinquishing all rights to the property. If these documents are executed by the non-purchasing spouse they are not considered a borrower and need not sign the application. However, in all other states, the non-purchasing spouse is not to appear on the deed or otherwise take title to the property.
Spouses who sign relinquishing their rights to the property, pursuant to applicable state laws, do not need to sign the mortgage note.
Unless specifically excluded by state law, the debts of the non-purchasing spouse must be included in the borrower’s qualifying ratios if the borrower resides in a community property state or the property to be purchased is located in a community property state. The non-purchasing spouse credit history is not to be considered for credit denial; the non-purchasing spouse’s debts must be included in the debt-to-income ratio.
I hope this recap of some basic information has been helpful – next week, I will continue with other “basic” information.
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Till next week – Keep processing. More later.
About The Author
Joan Ewing - As an op-ed writer and active FHA DE Underwriter for the past 15 years, Joan Ewing is a proud NAMP® Certified Ambassador Loan Processor (NAMP®-CALP). Joan brings years of FHA Government experience to her writings, letting her readers tap into her underwriting knowledge base.
