Herman Ransom, Director, Office of Multifamily Housing - Hud-Oig

Picture 3: Comparable 2 valued at $66 persquare footPicture 4: Comparable 3 valued at $60 persquare footFour Loans Had Debt and AssetDeficienciesPrimeLending Did Not Include Credit Card Debt in Debt-to-Income RatiosPrimeLending did not include some credit card debt for two loans. It wasresponsible for including and reviewing all debt.7 For one loan, PrimeLendingdid not include $1,292 in credit card debt. The borrower’s debt-to-income ratiototaled 56 percent without the credit card debt and 58 percent including the creditcard debt. The desktop underwriting findings report noted the omission andrequired PrimeLending to support excluding the debt. The file contained no suchdocumentation.For another loan, the borrower’s credit report contained credit card debt of$2,039. The destktop underwriting findings report required PrimeLending tosupport the payoff of the debt. The file did not contain payoff evidence beforeclosing. PrimeLending should not have closed this loan without the payoffevidence.PrimeLending Showed a Secondary Lien as a GiftPrimeLending showed a secondary lien from the Texas Department of Housingand Community Affairs as a gift and in the reserves on the desktop underwriterreport. This report overstated the assets of the borrower. HUD-FHA regulationsprohibit the inclusion of secondary financing as a gift.8 Without the inclusion ofthe secondary lien, the borrower maintained only $840 in reserves. 9 Theborrower’s debt-to-income ratio including the house payment was at 48 percentwithout the secondary lien. Although, FHA does not require a reserve amount for789FHA’s TOTAL Mortgage Scorecard User Guide, page 9TOTAL Mortgage Scorecard User Guide, page 18This amount includes what the borrower maintained in her checking and savings accounts after reducing theaccounts by the amount of funds needed to close.8