La Autoridad Ambiental en el Valle del Cauca

Credit (continued)

Economic Event Related Collections and Judgments

Documentation is required to evidence all collections and judgments were the result of the Economic Event. Open collections and judgments must meet FHA guidelines as outlined in the 4155.1

Economic Event Related Foreclosure

Documentation is required to support the foreclosure or deed-in-lieu was the result of the Economic Event and a minimum of 12 months have elapsed since the date of the foreclosure or deed-in-lieu (recording date of trustee’s sale).

Economic Event Related Short Sale

Documentation is required to support the short sale was the result of the Economic Event and a minimum of 12 months have elapsed since the date of the short sale.

Economic Event Related Chapter 7 Bankruptcy

Documentation is required to evidence the bankruptcy was the result of the Economic Event and a minimum of 12 months have elapsed since the discharge of the

bankruptcy.

Economic Event Related Chapter 13 Bankruptcy

Documentation is required to evidence the bankruptcy was the result of the Economic Event, the Chapter 13 Bankruptcy was discharged prior to the loan application, and all required bankruptcy payments were made on time or at least 12 months of pay-out under the bankruptcy has elapsed and all payments were made timely.

If the Chapter 13 Bankruptcy was not discharged before loan application, written permission from the Bankruptcy court is required.

Income Documentation is required to evidence borrower’s Household income was reduced by 20% or greater for a minimum of 6 months as a result of Loss of Employment, Loss of Income, or a combination of both. A copy of the prior note may be required.

Note: A household member is all individuals residing at the borrower’s primary

residence at the time of the Economic Event and was also a co-borrower on the borrower’s previous mortgage. The loan file must contain the necessary authorizations to verify Household Members employment or income even if the Household Member is not an applicant on the new loan.

Loss of Employment

The Loss of Employment must be documented by a written VOE evidencing

borrower’s termination date. If borrower’s previous employer is no longer in business, a copy of a written termination notice or evidence of the business’ closure and documentation of receipt of unemployment will be acceptable.

Economic Event (continued)

Loss of Income Documentation of Borrower’s Household Income prior to the Loss of Income is

required. A written VOE evidencing the prior income or signed tax returns or W2’s are acceptable documentation.

If the borrower had seasonal employment, a two year history of seasonal employment in the same field just prior to the Loss of Income is required in addition to meeting the criteria stated above.

If the borrower experienced a Loss of Income from part-time employment, a two year history of continuous part-time employment just before the Loss of Income is required in addition to meeting the criteria stated above.

Post Economic Event Income

All Household Members income must be documented after the onset of the Economic Event in accordance with standard FHA guidelines.

Housing Counseling

Borrowers who experienced an Economic Event must participate in a homeownership counseling program. The participant must:

 receive homeownership counseling or a combination of homeownership education and counseling provided that each participant receives, at a minimum, one hour of one-on-one counseling from HUD-approved housing counseling agencies, as defined at 24 C.F.R. §214.100. The counseling must address the cause of the economic event and the actions taken to overcome the economic event and reduce the likelihood of reoccurrence. The housing education may be provided by HUD-approved housing counseling agencies, state housing finance agencies, approved intermediaries or their sub-grantees, or through an on-line course, and

 be completed a minimum of thirty (30) days but no more than six (6) months prior to submitting a loan application to a lender, as application is defined in Regulation X, implementing the Real Estate Settlement Procedures Act, 24 C.F.R. §3500.2(b).

Housing counseling may be conducted in person, via telephone, via internet, or other methods approved by HUD, and mutually agreed upon by the borrower and housing counseling agency, as provided for in the regulations at 24 CFR §214.300 and in the Housing Counseling Handbook.

A list of agencies can be obtained online at http://www.hud.gov/ or by calling (800) 569-4287.

Housing Counseling Fees

Housing Counseling provided to potential borrowers who experienced an Economic Event may be funded through any means permitted by the HUD Housing Counseling Program, see 24 C.F.R. Part 214 and Handbook 7610.1, Rev-5.

However, any housing counseling fee must be charged in accordance with 24 C.F.R. §214.313, and must be reasonable, affordable, customary and commensurate with the services provided

(http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/han dbooks/hsgh/7610.1).

Economic Event (continued)

Housing Counseling Documentation

The Housing counseling agencies must provide the following disclosures to all clients:

 An explicit description of any financial relationships between the agency and any lender;

 A statement that the borrower is not obligated to pursue a loan with a lender; and

 A statement that “Completion of this housing counseling program and receipt of a letter of completion of counseling do not qualify {you/the borrower} for an FHA loan. A lender will have to determine if {you/the borrower} qualify for a loan. You understand that you may not be approved for a loan.”

Additionally, the agency must provide information on alternative services, programs, and products that are available.

CMS will require a copy of the executed Housing counseling disclosures in addition to documentation verifying the following:

 the borrower has completed the required pre-purchase housing counseling by obtaining a letter from the borrower issued by the Participating Housing Counseling Agency on agency letterhead and that includes the agency’s Tax Identification Number (TIN). The letter must state: the borrower’s name, the counselor’s name, that counseling was delivered in accordance with ML 2013- 26 requirements, the date upon which counseling was completed, borrower’s signature and the signature of an authorized official of the counseling agency providing the counseling,

The disclosures and evidence of counseling completion are required in the FHA Case Binder immediately after the borrower’s credit report.

Waiver or Resolution of CAIVRS Indicator

If CAIVRS indicates the borrower had a claim paid within the previous 3 years on a FHA insured loan and this was a result of an Economic Event, CMS may submit a request for waiver or resolution of the unresolved CAIVRS indicator.

On HUD 92900-A, page 3, the DE will indicate in the Additional Conditions under

Other, “Subject to CAIVRS indicator resolution by FHA”.

The DE will then submit the request with a cover letter to HUD. he cover letter is to indicate this is a CAIVRS clearance request for “Back to Work”, include the FHA Case number, borrower(s) name(s) with CAIVRS indicators, page 3 of the 92900-A signed by the DE and the DE’s contact information.

Requests are sent to the following address:

US Department of Housing and Urban Development Attn: Division Director, Home Mortgage Insurance Division 451 7th St. SW, Room 9266

Washington, DC 20410

HUD will review the request and provide CMS with affirmation of the decision for waiver or resolution.

Major Adverse Credit (continued)

Delinquent Federal Debt

If a borrower is currently delinquent on any federal debt (e.g., VA guaranteed mortgage, Title I loan, federal student loan, etc.), or has a lien secured by his or her property for any federal debt owed, as revealed by public records, credit information or HUD's Credit Alert Interactive Voice Response System (CAIVRS), regardless of the automated underwriting recommendation, one of the following must be met:

 The account must be brought current.

 The account is paid off.

 A satisfactory repayment plan is made between the borrower and the federal agency.

Judgments and Tax Liens

All tax liens and court ordered judgments must be satisfied prior to closing, regardless of the automated underwriting recommendation. Tax liens and judgments may remain unpaid if the borrower has entered a satisfactory repayment agreement with federal agency owed to make regular payments on the debt and the borrower has made timely payments for at least 1 month of the scheduled payments. The borrower may not prepay scheduled payments in order to meet the required minimum of 1 monthly payment. The creditor must subordinate to CMS loan and subordination agreement must be provide.

The loan should be processed with the monthly payment included in the borrower's debt-to-income ratio. A letter of explanation must be provided if the credit report shows federal or state tax liens.

A court ordered judgment is not required to be paid off if the borrower has an agreement with the creditor to make regular timely payments. Documentation of the agreement and evidence of timely payments are required.