Just when you thought it was safe to go out and buy a new home HUD has changed the FHA mortgage rules with Mortgagee Letter 2008-25 which is a response to the “Walking Buyer” and “Buy and Bail” trends in Arizona as well as the rest of the country.
A Walking Buyer (or Buy and Bail buyer) who has a home they cannot sell because they are upside down on the mortgage simply finds an affordable home and rents the current home. This helps them to qualify for the new home and then, once they move into the new home… they let the old one go into foreclosure.
Additionally, this fraudulent practice put yet ANOTHER FORECLOSURE HOME on the market and we just don’t need additional foreclosures out there bringing property values down further.
Under the old rules (up until a few days ago) it was acceptable to use rental income on your existing home to qualify for your new Arizona FHA Mortgage Loan.
There are certain circumstances in which the new rental income may be used to qualify for the new Arizona FHA Mortgage Loan.
There are 6 things FHA home buyers need to know about this change:
- It is temporary
- To use the income the home buyer must be moving to a new city
- To use the income the new home must be outside reasonable commuting distance from the old home
- To use the income the old home must be leased for at least one year
- To use the income the home buyer must document the receipt of the security deposit
- To use the income the existing home must have a 25% equity position
Paul Dunn - Tucson
Apply for an Arizona FHA Mortgage Loan Now.
Paul Dunn
Tucson’s #1 FHA Mortgage Loan Originator
First Priority Financial
(520) 225-0380
tucson-fha-loans.com
usdaruralhomeloans.com
