ADDITIONAL FHA OVERLAYS FOR 2-4 UNIT PROPERTIES

Effective for all new FHA submissions beginning Monday, July 2, the following new overlays apply for all 2-4 unit properties:

  • At least one full calendar year must have elapsed between the Seller’s acquisition date the execution of the Sales Contract.  This does not apply if the Seller is a government agency, a bank, or a bank subsidiary.
  • The subject property must not be in foreclosure, as defined by the listing of a Lis Pendens (or equivalent) in the title binder.
  • The “2-4 Unit Identity-of-Interest Certification” must be executed at closing by the Buyer, Seller, and both attorneys, attesting that there is no relationship between the Buyer and Seller.  This new Certification will be posted on our website by Friday, July 13th.

This Announcement also serves to clarify and memorialize our existing policy governing 2-4 unit properties being sold subject to a Short Sale Agreement:

  • All 2-4 unit properties subject to a Short Sale Agreement must have been listed on the MLS for at least 90 days prior to the execution of the Sales Contract.  If the property is designated on the MLS as an “Exclusive Listing” (meaning that only the Listing Agent has the right to show the house to buyers), the property is ineligible.

These new overlays are in addition to the overlays introduced in Announcement 12-04 for 2-4 unit properties in Illinois, and 3-4 properties in New Jersey and New York.  As a reminder, these are:

  • Maximum DTI 45.00%; and
  • If LTV >90%, then no gifts or grants are permitted.
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