Articles Published in: June 2011

June 10, 2011

FHA Advice On Home Loans and Lenders

FHA home loans are designed to be pro-consumer. While they don’t penalize a lender in any way, FHA loan rules do restrict the types and amount of fees, charges and other costs associated with borrowing. The mission of the FHA is to be fair to all parties, borrower and lender alike. The borrower doesn’t pay inflated fees, and the lender gets a loan guarantee from the government. The FHA offers referrals for housing counselors and advice to house hunters exploring their options under the FHA loan program. The FHA official site has plenty of sound advice for people trying to navigate the complexities of buying a home, getting the best price, and other aspects of becoming a home owner. A lot of it seems fairly obvious to experienced borrowers, but | more...

June 9, 2011

FHA and HUD Offer Disaster Relief to Illinois, Oklahoma, Minnesota

By Joe Wallace

Recent storms in Illinois, Oklahoma, Minnesota and elsewhere have prompted a great deal of activity from the FHA and HUD recently. A series of press releases have announced help for states and “other entitlement communities” including the ability to redirect or re-allocate current federal resources toward disaster relief and recovery efforts. HUD also reminds borrowers about its standard types assistance for storms and other natural disasters, including the agency’s policy on foreclosures. “…immediate foreclosure relief – HUD granted a 90-day moratorium on foreclosures and forbearance on foreclosures of Federal Housing Administration (FHA)-insured home mortgages…” according to HUD press release HUDNo.11-116. Other help for FHA borrowers includes the HUD Section 203(h) program which “provides FHA insurance to disaster victims who have lost their homes and are facing the daunting task of | more...

June 9, 2011

FHA Loans and Housing Counselor Services

By Joe Wallace

One of the most important things a new house hunter should know about FHA home loans is that they don’t have to work through the complex process of applying for a loan, finding a home, or closing the deal on their own. The FHA knows the position first-time home buyers are in and offers plenty of advice and assistance. Did you know the FHA makes referrals to agency-approved counselors? According to the FHA official site, you can get advice on buying a home, credit, the cost of buying versus renting and much more. You can even ask for a counselor referral for foreclosure avoidance issues and refinancing topics. The Department of Housing and Urban Development sponsors housing counseling agencies all over the United States so that counseling can be provided | more...

June 8, 2011

FHA Loans: Deed-In-Lieu of Foreclosure Rules

By Joe Wallace

Borrowers having trouble making payments on their FHA mortgages are encouraged to contact the FHA and the lender as quickly as possible to discuss possible arrangements to help prevent the loan from going into default and foreclosure. In some cases a loan forbearance may be possible or a refinancing of the FHA loan, but in more extreme cases the borrower may consider a move called deed-in-lieu of foreclosure, sometimes called deed-in-lieu for short. A deed-in-lieu arrangement is for borrowers in default on their FHA loans who don’t qualify for any other HUD loss mitigation program. In essence, deed-in-lieu results in the borrower signing back the home to the mortgage company. FHA rules state that deed-in-lieu proceedings must be initiated within six months of the loan going into default, and there | more...

June 7, 2011

FHA Reverse Mortgage Loan Counseling Rules

By Joe Wallace

FHA Reverse Mortgages, also known as Home Equity Conversion Mortgages, have unique requirements because of the nature of the loan. HECM loans, which are intended for seniors age 62 and older, require no mortgage payments during the lifetime of the loan. HECM loans are paid off when the borrower dies or chooses to sell the property secured with the reverse mortgage. FHA rules state all HECM applicants must receive counseling to insure they are informed borrowers, fully aware of the responsibilities and requirements of a HECM loan as well as the benefits. This counseling must happen before the borrower commits to a reverse mortgage. According to Section 255(d) of the National Housing Act and FHA regulations found in 24 CFR 206.41, “all prospective Home Equity Conversion Mortgages (HECM) borrowers must | more...

June 6, 2011

FHA Loans: What Does LTV Mean?

By Joe Wallace

If you’re buying a home with an FHA mortgage, one term you’ll become used to seeing in your FHA loan documents is the phrase loan-to-value. LTV is especially important for calculating FHA mortgage insurance premiums and the length of time you’ll be required to pay those premiums. For example, on a new home loan with a term greater than 15 years, annual mortgage insurance premiums are cancelled when the LTV ratio hits 78% (as long as the borrower has paid the premiums for at least five years.) But what IS the loan-to-value ratio? How is it calculated? The property’s loan to value ratio is basically the percentage of the property value that is mortgaged. The FHA official site states, “If you divide the mortgage amount by the lesser of the | more...

June 3, 2011

The FHA Loan Application and Personal Debt

By Joe Wallace

When applying for an FHA home loan, the borrower is asked to list a variety of personal information including details about open lines of credit, car payments, any previous or current mortgages and other important details. All this data is used by the lender to establish how much debt the borrower has, how adding an FHA mortgage commitment might affect the ability for the borrower to pay, and how much money is coming in versus how much is owed. Good lenders know that debts and income are always changing–they are not fixed or constant. People pay off bills, credit cards and other obligations. They also open up new lines of credit, take on additional debt and increase their levels of financial responsibility. That’s one reason why credit experts advise FHA | more...

June 3, 2011

FHA Loans and Extensions of the Conditional Commitment

By Joe Wallace

As stated elsewhere in this blog, the appraisal process is one of the most important parts of the FHA home loan process. A borrower (and the lender) learns about the general state of the property and its fair market value thanks to the FHA appraisal, and once that process has been completed the FHA loan process can move forward and a buyer can offer a commitment to purchase the property. Due to the ever-changing nature of the housing market, FHA appraisals have an expiration date–the appraisal is not good indefinitely. What happens if for some reason the buyer delays in committing to the purchase of the home, or otherwise runs the risk of having the deal close after the appraisal has expired? Does the buyer have to pay for a | more...

June 2, 2011

FHA Loans: How Do I File A Complaint About Closing or Settlement Issues?

By Joe Wallace

FHA loans have a variety of rules and regulations about closing and settlement of FHA insured mortgages. Borrowers are protected under the Real Estate Settlement Procedures Act against fraud and shady business practices including kickbacks, artificially inflated fees and costs, and other problems. Thanks to state and federal laws, it’s more difficult than ever to take advantage of an FHA loan applicant or inflate the costs associated with an FHA home loan.

June 1, 2011

FHA Loans and Escrow Accounts

By Joe Wallace

The Real Estate Settlement Procedures Act provides powerful consumer protections when it comes to home loans. It establishes limits, requires lenders to be transparent when it comes to fees and expenses, and requires the borrower to be fully informed as to the costs of a home loan. FHA borrowers and conventional loan applicants alike are protected under RESPA. There are many protections, rules and requirements under RESPA, but one particular part of the act applies to escrow accounts for real estate loans. According to the FHA official site, “Section 10 of the Real Estate Settlement Procedures Act (RESPA) limits the amount of money a lender may require the borrower to hold in an escrow account for payment of taxes, insurance, etc. RESPA also requires the lender to provide initial and | more...