New FHA Guideline?

An agent I know has a listing whose buyer has been told by his lender about an FHA program where if he has a co-signor (like his father) on the loan, and they pay perfectly for 12 months, that the co-signor dad can simply be "dropped off" the mortgage after then.  I have heard nothing of this, and cannot dream of why another loan officer would make up something like this if it had no validity.   Has anyone head of this?  thanks

  • November 08 2011 - Nashville
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Answers (6)

Thanks for the responses.  Most likely the loan officer is assuming that the borrower will have to requalify (credit qualify, not income-qualify) on his own after 12 months and will actually need to refinance the loan via a streamline refi.  Of course what the borrower was told and what the borrower thought he heard were  2 different things!
  • November 09 2011
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Perhaps the loan officer is assuming the buyer will qualify for a refi in 12 months on his own?
  • November 08 2011
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It sounds like he's heard of the concept but knows nothing of the details.

The co-signer can come off through a non-credit qualifying streamline refinance. The payment of course would have to decrease 5% or more, so it would also depend on rates at that time. The son would have to prove he's made the last 12 months on time  payments on his own (no joint acct w/ dad). This only works if dad is only a co-signer, not a co-owner.

another tact would be for the son to assume the loan which would then remove the co-signer, for that he'd have to fully qualify.





  • November 08 2011
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That would be incorrect.  The father will remain on the mortgage until the house is sold or the mortgage is refinanced.  Now if the son paid the mortgage on his own for a 12 month period, the debt would not count against the father should he look to buy a home after that time.
  • November 08 2011
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This seems like a great tool.  let me know if someone finds an answer.
  • November 08 2011
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"I have heard nothing of this, and cannot dream of why another loan officer would make up something like this if it had no validity."

A loan officer that would tell a lie... that's preposterous! 

  • November 08 2011
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