My New Outside Blog: Report: FHA the Truth or Fiction Game Report: FHA the Truth or Fiction Game Report: FHA the Truth or Fiction Game is based on Mortgagee Letters everyone has heard about, but until you try to implement them you do not know if they are true or fiction in the real world of lending. So lets begin with an easy one alright?

Fact Or Fiction



1) FHA now has implemented a minimum FICO Score set at 580. If you do not have a minimum FICO score of 580 you will need 10% down? Is this Fact or Fiction? This is Fact based on FHA guidelines, but Fiction in the real world of lending! Lenders have what is called Matrix's or Overlays set by the investors that buy the loans on the secondary market. Few lenders will do 580 while most are set at 620 minimum FICO score and no hits to the rate with FICO scores over 640. Mortgagee Letter 10-016.


Fact Or Fiction2) FHA has waived the 90 day flipping rule. Is this Fact or Fiction? Fact FHA has waived the 90 day flipping rule starting January 15th, 2010. Fiction in the real world of lending. All lenders will not accept this waiver and will still require 91 days from the last record of sale date. As of today I have only two lenders now with a lot of restrictions. The sales price cannot be more then 20% above the previous sale and requires two appraisals. The second appraisal cannot be paid by the seller. Again the investors are fearful of fraud on these and it is not worth the risk to try to sell on the secondary market. Mortgagee Letter 10-011



Fact Or Fiction3) FHA allows a borrower to use a FHA loan when they just completed a short sale on their primary home that was less then 3 years? Fact or Fiction? Fact the FHA did make this change with the Mortgagee Letter 09-52 dated December 16th, 2009 allowing the borrower use a FHA loan when just completing a short sale. Fiction in the real lending world only one lender will accept this Mortgagee Letter 09-52 based on the following criteria:

a) The short sale was due to other circumstances other then declining markets.

b) The borrowers were current on the mortgage and other installment debt on the previous owned property.

c) The proceeds of the short sale served as payment in full.

Based on the following Criteria this would be Fiction for most borrowers and they would not be able to qualify.

Fact Or Fiction


We are now halve way through March and HUD has released Mortgagee letter 10-051 on March 16th, 2010. With program changes, new guidelines changes, then lenders interpretation of the changes, and the placements of their overlays due to the FHA changes, it is enough to make your head spin!



         Kenny Salame                                                                                                  Equal Housing

Kenny Salame
Senior Loan Officer
All Western Mortgage Inc.
8345 W. Sunset Rd.
Suite 380
Las Vegas, NV, 89113
Mobile: 702--506-3301
Direct: 702-947-0609
Office: 702-369-0905
Fax: 702-952-0887
Comment balloon 2 commentsKenny Salame • March 16 2010 05:01PM


I am finding there are issues (overlays) with conventional and even FHA beyond 91 days!

Posted by Renée Donohue~Home Photography, Western Michigan Real Estate Photographer (Savvy Home Pix) about 9 years ago

Renee I have had no issues on any of my loans that were over 91 days. Most of my loans are FHA and the conventional that I do have is a Non Conforming Jumbo and it has been on the market for a long time.

Posted by Kenny Salame, NMLS ID 313873 (All Western Mortgage Broker # 14210) about 9 years ago