About the Writer. Stacey Sprain is currently a National Association of Mortgage Professionals (NAMP) member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). The following article is reprinted, with permission, from the NAMP blog.
There are a few things that need to be clearly communicated to you as the processor for each incoming FHA file so that you are able to “head off” what can turn into last minute processing requirements. If you receive a file without these details clearly established, you need to ask the questions necessary to determine the answers. Asking a few simple questions up front can save you a lot of grief and conditions that can pop up later in the process, hold up the file and hold up the customer’s closing.
As I have found based on experience through the years, the following details are of utmost importance when I'm receiving any new FHA file for processing:
#1- Age of the property. This is important for several reasons. If the property was built prior to 1978, you will want to watch the FHA appraisal carefully for any lead base paint inspection or repair requirements (CLICK HERE FOR ATTACHMENT).
If the property was built within the past 12 months, you need to follow new construction property protocol (CLICK HERE FOR ATTACHMENT) which may include processing the file as existing construction, under construction or as proposed construction. Additional documentation requirements may be necessary depending on the status of the construction at time of processing.
#2- Type of property. It is equally important to know if the subject is a standard single family detached home, an attached home or townhome, a condominium, or a manufactured home. You will have varying documentation requirements based on the property type alone.
An attached home of any sort will require a shared maintenance agreement which should include shared wall agreement, shared driveway agreement, shared roofing agreement... Often these agreements are hidden within decs and bylaws or recorded documents that are part of the title but in many cases I have found from personal experience, there may be no shared agreements recorded if the property hasn't transferred to FHA or VA buyers before. In those cases, it's important to get realtors and attorneys "on the hunt" to determine if such agreements exist or if they need to be drawn up, provided to underwriting and recorded at closing.
A condominium needs to be either on HUD's approved condominium list or must meet spot loan condo requirements. It's important to know up front the name of the project and the management company or HOA contact so you can obtain a completed spot loan questionaire and project insurance information as well as copies of decs and bylaws as required by some underwriters. It's important to establish that the property qualifies as a spot loan condo early on for any condo not found on the approved list.
A manufactured home requires among other standard requirements, a foundation inspection by a certified/licensed engineer and the manufactured home must be affixed to a permanent foundation and cannot have been moved from any other location. Foundation compliance must be met.
It's also important to establish whether or not the property is serviced by community water & septic or if the property includes a private or shared well/septic system. These too can lead to additional inspection and/or repair requirements as made by the FHA appraiser. Knowing ahead of time keeps you on alert to review those sections of the appraisal more thoroughly when the appraisal arrives.
It's also important that any unique property types be communicated to you up front. These would include such properties as berm homes, log homes, rural properties, properties with a large amount of acreage, stilt properties, waterfront properties etc. All of these property types often lead to the requirements for additional appraisal comparables and can lead to additional questions and documentation requirements from underwriting.
The more you know about the subject property up front with the new file, the better chance you have of catching any documentation and processing requirements the originator may have missed or that he/she may not even know are potential issues!
About the Writer. As one of NAMP's volunteer writers, Stacey Sprain is currently a NAMP member in good standing and is a NAMP Certified Ambassador Loan Processor (CALP). Feel free to email Stacey at: [email protected]. Or, if you would like to become a volunteer writer for NAMP, please email us at: [email protected].
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