Articles Published in: September 2011

September 20, 2011

Hope For Homeowners Program Near An End

Time is running out on the Hope For Homeowners program which is currently set to stop permitting endorsements after September 30, 2011. During the sub-prime mortgage crisis, the Hope For Homeowners program was created to help stabilize the housing market. It was originally created to prevent qualified home owners from defaulting on their loans, and avert foreclosure. Those in danger of defaulting on FHA home loans were urged to call their lenders and request an evaluation for eligibility in the program. According to the Hope For Homeowners Act of 2008, borrowers were eligible of the original loan originated before 2008, the loan default was not caused intentionally, and the borrower didn’t have multiple home loans. This was not a simple refinancing plan similar to other loan forbearance or FHA loan | more...

September 19, 2011

FHA Loans: What Is An Excessive FHA Loan Amount?

By Joe Wallace

The FHA anticipates a wide variety of scenarios a loan applicant might face during the process of applying for an FHA mortgage loan; the agency tries to anticipate many of these situations by issuing guidance for borrowers and lenders alike to prevent gray areas wherever possible. Sometimes these gray areas can’t be helped (usually based on individual circumstances) and the borrower and/or lender must contact the FHA for additional instructions. Other times the guidance issued is sufficient for the lender to decide on the right course of action and move forward on the FHA loan without further delays. One situation the FHA anticipates is known as an “excessive loan” or “excessive loan amount. According to the FHA official site, “An excessive loan amount occurs when the lender closes a loan | more...

September 16, 2011

FHA Loans: Chinese Drywall Update

By Joe Wallace

Earlier this year we posted an update on a study related to contaminated drywall imported from China; the FHA has issued several press releases regarding the contaminated product which may have been used to construct homes eventually purchased with FHA insured mortgages. In May 2010, a U.S. Consumer Product Safety Commission press release identified a group of manufacturers,

September 15, 2011

FHA Loans and Home Inspections–What Borrowers Should Know

By Joe Wallace

The FHA requires an appraisal for any property to be financed with an FHA insured mortgage. The appraisal insures the home meets FHA standards and establishes a fair market value for the home. But an appraisal is not considered an inspection, and just because the home passes the appraisal process with little or no recommendations for repairs or improvements does not mean the house is free from defects. FHA encourages borrowers to hire a home inspector to examine the home prior to purchase. Borrowers should consider putting a clause in their purchase agreements that make final commitment to the loan contingent on the results of a home inspection. The borrower is responsible for paying for the inspection, and choosing one is just as important as having the work done. Some | more...

September 14, 2011

FHA Loans and Credit Score Data–What You Need To Know

By Joe Wallace

There are plenty of FHA rules governing how a loan applicant’s credit data must be reviewed and processed to determine if he or she is a good risk for an FHA loan. One of the first things covered by the rules is how credit scores are to be used in the process. “When a credit score is available, it must be used to determine eligibility for FHA insured financing,” according to the FHA official site. But how does the FHA view the actual score numbers? The answer to that question is a bit tricky because of changes to the FHA loan rules. Let’s examine FHA insured loans for new purchase transactions with case numbers assigned on or after October 4, 2010. A “new purchase” FHA loan is typical for situations | more...

September 13, 2011

FHA Loans and Credit Scores

By Joe Wallace

FHA home loans take into account a variety of factors when a lender is trying to determine a borrower’s potential as a credit risk. While the FHA does look for a record of on-time payments and other factors that make a borrower a good risk, the rules for FHA loans also require the borrower to use credit score information to help make the determination to approve or deny an FHA mortgage. FHA rules state, “When a credit score is available, it must be used to determine eligibility for FHA insured financing.”

September 13, 2011

FHA Loans and Discrimination

By Joe Wallace

A recent press release issued by the Department of Housing and Urban Development underscores the FHA and HUD’s commitment to the Fair Housing act. The release details actions taken by HUD against a Wisconsin landlord for alleged violations of the Fair Housing Act. While a press release about a discrimination issue connected with rental property might not seem to have much to do with FHA home loans at first glance, it does underscore the need for FHA borrowers to report such discrimination wherever they encounter it in the loan or house hunting process. According to HUD press release 11-207, “The U.S. Department of Housing and Urban Development (HUD) is charging a La Crosse County, Wisconsin landlord with violating the Fair Housing Act for refusing to rent a house to a | more...

September 12, 2011

The Features of FHA Home Loans

By Joe Wallace

The FHA loan program has helped first-time home buyers and other house hunters since it started in 1934. FHA insured loans are designed to help people get affordable home loans featuring low down payment requirements and affordable closing costs. The program is designed with credit requirements far more lenient than many conventional home loan programs on the market today. Some borrowers turn to FHA-insured loans because they discover the down payments, interest rates and other terms on conventional mortgages ask too much or are too restrictive. Some borrowers worry their credit score or history isn’t good enough to get the most competitive rates. In these cases, FHA mortgages are definitely worth a look and can be a means to home ownership for borrowers who might not qualify for a conventional | more...

September 9, 2011

The FHA Energy Efficient Mortgage

By Joe Wallace

With summer fading and the winter season only a few months away, many house hunters and home owners begin thinking about heating bills, weatherproofing, and other preparations for the cold weather season. In many areas where extreme weather is a typical part of the winter months, these considerations are even more important. For FHA borrowers who live in areas with seasonally high utility bills, there is help from the FHA in the form of the FHA Energy Efficient Mortgage or EEM. The FHA Energy Efficient Mortgage began as an experiment in 1992, expanding to a full-blown FHA loan feature in 1995. The FHA official site says of these loans, “All persons who meet the income requirements for FHA’s standard Section 203(b) insurance and can make the monthly mortgage payments are | more...

September 8, 2011

FHA Vs. VA Loans: What Vets Should Know

By Joe Wallace

The VA home loan program is an important military benefit–qualified veterans who have served a minimum time on active duty may apply for a government backed loan for affordable housing. These loans are also available to qualified members of the National Guard and the Reserves. There is a zero-downpayment option which makes the loan more attractive, and the VA has strict rules concerning reasonable interest rates and terms. With all of these benefits and advantages, why would a veteran consider using an FHA home loan? After all, both VA loans and FHA mortgages offer similar things