Enabling Loan Prospector to Assess Federal Housing Administration and Department of Veterans Affairs New Construction LoansMay 21, 2009
On June 14, Freddie Mac updated Loan Prospector® to allow new construction loans for the Federal Housing Administration (FHA) and Department of Veterans Affairs (VA) to be assessed through Loan Prospector. This update enables FHA and VA loans that meet the requirements for new construction loans to use 180-day credit freshness instead of the current 120-day credit freshness.
To support this change on FHA or VA new construction loans, Loan Prospector was updated on June 14 with the following new and existing feedback messages to provide you with guidance for FHA or VA new construction loans on new submissions to Loan Prospector*. These new and updated feedback messages are effective for all Loan Prospector submissions.
| Message Code | Feedback Message | Purpose |
|---|---|---|
| New Feedback Messages | ||
| LPN KO | Review for Accuracy: FHA Underwriting Guidelines vary for New Construction and may affect Maximum Mortgage calculations/LTV. Refer to Handbook and review corresponding Assessment expiration date on feedback certificate. | Indicates the need to review FHA underwriting and appraisal requirements for new construction mortgages. |
| LPN LP | Review for Accuracy: VA underwriting and appraisal guidelines vary for Proposed/Under Construction loans. It is the lender's responsibility to ensure all such guidelines are met. Please refer to the VA Lender's Handbook for additional information. | Indicates the need to review VA underwriting and appraisal requirements for new construction mortgages. |
| ELV 57 | This loan is ineligible for selected refinance program. | Indicates FHA streamlined refinance is not eligible as new construction loan to use 120 day credit freshness. |
| Updated Feedback Messages (Existing messages updated with new language) | ||
| ELV K4 | Loan Type can be Conv. or FHA with Construction Conversion | Indicates that new construction value of construction conversion option is not allowed on VA loans. |
| Updated Feedback Messages (Updated when existing feedback messages are returned) | ||
| INV BM | Building Status must be Proposed or Under Construction. | Indicates the status must be either proposed or under construction when selecting the new construction option of Newly Built for FHA or VA; or if FHA with new construction option of construction conversion and property type of manufactured home. |
| INV CF | Building Status ineligible for New Const Mortgage Selected | Indicates the building status may not be proposed or under construction when selecting the new construction option of construction conversion for FHA loans that are condominiums. |
| ELV 31 | Loan purpose must be Purchase | Indicates the loan must be a purchase transaction when selecting the new construction option of newly built for FHA or VA. |
Important Information
When submitting FHA or VA new construction loans with merged credit, including the Merged Credit Reference Number option through Loan Prospector, please keep in mind:
-
You must ensure the FHA or VA new construction loan is submitted through Loan Prospector within 120 days from the date the merged credit report was created.
-
If the merged credit report reaches the 121-day mark you will not be able to submit the loan to Loan Prospector initially as a FHA or VA new construction loan, unless new credit is obtained through the credit reporting company (CRC).
-
If you resubmit a new construction loan you must keep the same CRC, critical borrower data and submitting entity after the first 120 days to maintain the same credit data for 180 days.
-
You must obtain new merged credit if any critical data changes (that requires a credit repull).
-
For FHA New Construction Loans Only: For a FHA new construction loan submitted within 120 days from the date of the merged credit report, you will be able to resubmit the loan to Loan Prospector after 120 days and up until 180 days as long as no critical borrower data changes are made. The valid new construction options include newly built and construction conversion.
-
For VA New Construction Loans Only: For a VA new construction loan (only valid option is newly built) submitted within 120 days from the date of the merged credit report, you will be able to resubmit the loan to Loan Prospector after 120 days and up to 180 days as long as no critical borrower data changes are made. Please note the use of merged credit is not mandatory, and the credit freshness changes will also apply to credit infiles or AUS only files after 120 days and up until 180 days as long as no critical borrower data changes are made that would require new credit infiles to be reordered directly from the CRCs.
Check with your loan origination system vendor to determine the timing and availability of this change to their Loan Prospector interface.