FHA LTV Cutoff Confusion

by Michael Shohoney February 10, 2009 09:17
Lately we've fielded a lot of calls and emails questioning where the ZMath Engine, eZMath and ZMath cutoff FHA MIP premiums.  Universally, the inquirer states that we are cutting off the MIP too early.  Invariably what is going on is that there is financed premium involved.  For that reason, the calculation of the cutoff is not as straight forward as calculatiing the percentage of the loan's balance and looking at the amortization schedule for that balance.  No, the calculation is quite a bit more involved than that.  Apparently, there are a few LOS and underwriting systems out there that do not do this correctly!  For that reason, we will not go into the specifics of the correct calculation.  Rest assured, we have it correct here in all of our software.  So, if you're questioning your results, contact us and we will share with you why we are right and why your other system is falling short or should we say long of the correct result!