FHA Questions
I am working a SS on an FHA loan, Chase is the lender. The home owner wayyyy over paid for the property. Chase's paperwork does not have the - what i thought was FHA typical - "appraisal must be 70% of the principle and interest payoff". Also thought there was some criteria for repairs (maybe that is the appraisal at 70%), or maybe I am getting confused.. Anyway, even at 70% they house is over market. The Chase loss mit rep does not know about this 70% criteria, is it possible that my SS can go through at less than 70%, or it is a gotcha that will kill the deal at the end. Also, was there another FHA criteria?
Brenda
Brenda, the FHA criteria is dynamic...
Lots of fraud with appraisals on FHA mortgages and the purchase of homes..flipping, etc.
If it looks like a rat and smells like a rat.... it might be another origination scam.
SSPro, so are you saying that each lender, even if the loan is FHA, can set their own guidelines?
Also, what is your experience of meaning over paying, inflated appraisal, etc in the SS offer. Does it build your case or detract from your case.
The house was a supposed redo, but in the attic there is charred decking throughout and new rafters. so it was a fire house. None of the work was done with permits. Should I meantion the fire and no permits and inflated appraisal?
Thanks
Brenda
Not individually, but the FHA can change and implement it's criteria without warning.
The latest info: the lender must net 82% of the confirmed, as is value & (I'm looking it up in the revised Primer) the FMV divided by the mortgage amount must be greater than 63%
And there is another ratio that addresses catastrophic loss due to fire, flood, etc. but that doesn't seem to apply in your case.
I wouldn't necessarily mention the fire damage.... since repairs seem to have been made.
The mortgage amount was 84,000 x .63 = 52,902. But the house is not worth $52,902. So is the SS dead?
Should I try the SS anyway? Is it possible that it will slip through the cracks. Does FHA approve, or is it all within Chase.
Brenda
So thinking about this another way.
mortgage = 84,000
BPO/FMV >= 52,902 (63% of Mortgage)
Offer >= 43,374 (82% of FMV)
Brenda
You are making my remaining hair to hurt.
What's the confirmed value?
What's the mortgage payoff?
I do not know the confirmed value. This is very early in the process. It is an older, lower income neighborhood. Just trying to figure out if the SS is even worth doing. I need to get the house cheap to make it worth my while, and the owner paid too much.
My thought process is always, "what do I want the confirmed value to be" and work from there - especially in a checker board neighborhood of older, inexpensive homes.
Guess my math was that it was an FHA loan, and the mortgage was 84,000. The asbsolute lowest offer I could get accepted would be the 43,374.
mortgage = 84,000
BPO/FMV >= 52,902 (63% of Mortgage)
Offer >= 43,374 (82% of FMV)
Why does the payoff amount matter? I do not know it. Definately not taking it Subject 2 or buying it.
Brenda
Brenda, I think that your method of calculation is inconsistent with what I wrote above.
If the house is worth $70,000, and the payoff is $84,000,
Then, $70,000 divided by the mortgage payoff of $84,000 = 87%
Per what I wrote above, the second ratio must be greater than or equal to 63% which in my example, it does.
As with any FHA short sale candidate, in order to determine feasibility, you've got to know what it's worth, and what is owed.
If the minimum net proceed to the mortgagee has got to be 82% of FMV, that's $57,400 to the lender.
Please show me where I went wrong. Obviously I am trying to construct the lowest possible offer that will be accepted.
You wrote "the lender must net 82% of the confirmed, as is value & (I'm looking it up in the revised Primer) the FMV divided by the mortgage amount must be greater than 63%"
I am assuming that the confirmed, as is value and the FMV are the same - the BPO price.
So I want the BPO as low as possible, so that I can get 82% of the lowest BPO price.
The lowest BPO that will be accepted is $84,000 * .63 = $52,920.01
Then my lowest possible offer would be 82% of $52,920.01 = $43,374
Do not see where I went wrong, but then that is what I have friends and family for.
Brenda
"The lowest BPO that will be accepted is $84,000 * .63 = $52,920.01'
'Then my lowest possible offer would be 82% of $52,920.01 = $43,374'
There goes my hair hurting again. If the BPO comes in at $84,000, the FHA mortgagee will have to NET not less than 82%, or $68,880
If you offered $43,374, they would summarily reject that offer based on the BPO.
[addsig]
Let me see if I can help here.
Payoff = $84,000.00
BPO = $53,000.00
Minimum Offer $43,460.00
This meets the criteria because the BPO came in above 63% of the payoff.
The offer is 82% of the BPO. Therefore this is a doable deal.
If I have added more mud to the water, just slap me and send me home.