Ask the Underwriter #11

We’ve received a couple of questions this month from multiple different partners, so we wanted to share our answers with everyone in this edition of Ask the Underwriter!

Question 1

What is “property flipping” on FHA loans and why does it matter?

Answer: Property flipping is the purchase and subsequent resale of a property in a short period of time. This practice can affect eligibility for an FHA-insured mortgage:

• A property that is being resold 90 days or fewer following the seller’s date of acquisition is not eligible for an FHA-insured mortgage.
• If the re-sale is happening 91 to 180 days after the seller has acquired the property, and the property is selling for double what the seller paid for it, then a second appraisal is required. 
• If the re-sale is happening 181 days after the seller has acquired the property, no additional guidelines apply.

Question 2 

My borrower works in the food service industry and has been temporarily laid off and/or working reduced hours due to COVID-19. What can I use for income?

Answer: The year-to-date earnings need to be reviewed. Most likely, they will be reduced from previous years’ earnings. The year-to-date (for the entire year, not just the time frame the borrower has been working) earnings will need to be used for the calculation provided the income appears to be stable again.

Have questions of your own for our underwriters?

Give us a call at 651-631-3111 or submit your question online!