Articles Published in: 2011

August 4, 2011

FHA Rules For Termite Treatment

When an FHA loan applicant wants to buy a home with an FHA-insured mortgage, the property must be appraised and an FHA-approved appraiser, who reviews the home to make sure it meets FHA standards. Depending on where the home is located, FHA loan rules or local ordinances may require pest control treatments on the property. The appraiser may also require them if evidence of termites or other insects is evident at appraisal time. The FHA rules for termite treatment are spelled out at FHAOutreach.gov. Those rules include guidance on the particular types of treatment, references, and guidelines on reporting and licensing requirements for pest control agencies used to treat a property to be purchased with an FHA mortgage. For new construction properties in “termite prone areas,” FHA rules say “acceptable | more...

August 3, 2011

FHA Section 203(k) Loan Facts

By Joe Wallace

The FHA Section 203(k) loan, sometimes called a rehab loan, the Federal Housing Administration’s “primary program for the rehabilitation and repair of single family properties” according to the official site. The FHA 203(k) is sometimes used in partnership with state or local agencies, non-profits and other groups to rehab homes, but the 203(k) can also be used by individuals to purchase and repair individual properties. The 203(k) section at FHA.gov states, “When a homebuyer wants to purchase a house in need of repair or modernization, the homebuyer usually has to obtain financing first to purchase the dwelling; additional financing to do the rehabilitation construction; and a permanent mortgage when the work is completed to pay off the interim loans with a permanent mortgage. Often the interim financing (the acquisition and | more...

August 2, 2011

FHA Home Loans, Appraisals, and Mold

By Joe Wallace

When looking for a home to purchase with an FHA loan, some borrowers find themselves in a situation where the results of the appraisal recommend mold abatement. Some potential borrowers challenge the mold abatement requirement–you can find many Q&A forums on real estate issues where posters have stated, “I’ve searched and did not find any documents that say that FHA requires mold to be remediated.” FHA standards for homes to be purchased with an FHA insured mortgage loan include a requirement that the property be free from defects and conditions which could affect the health or safety of the purchaser. A borrower may not find a “chapter and verse” type statement saying “Mold abatement is required”, but the health and safety clauses built into FHA loan regulations can and do | more...

August 2, 2011

FHA Disaster Assistance Announced For Kentucky, Wyoming, and New Hampshire

By Joe Wallace

2011 will likely go down in history as the “year of the storm,” if press releases from the FHA and HUD are any indication. Recent FHA announcements on the latest areas affected by storm and flood damage include press releases detailing FHA assistance for Kentucky, Wyoming, and New Hampshire. According to the FHA, federal disaster assistance is on the way in these areas to provide support for homeowners–including those with FHA mortgages. HUD Secretary Shaun Donovan is quoted in a recent FHA press release, saying “Families who may have been forced from their homes need to know that help is available to begin the rebuilding process…” Donovan added, “Whether it’s foreclosure relief for FHA-insured families or helping these counties to recover, HUD stands ready to help in any way we | more...

August 1, 2011

FHA Takes Action Against Hundreds of Lenders

By Joe Wallace

Elsewhere in this blog, we’ve written about the emphasis FHA/HUD places on consumer protection, the importance of the Fair Housing Act, and the FHA’s approach when it comes to protecting the customer. While it’s true that sometimes the customer is the first line of defense against discriminatory and otherwise illegal practices, the FHA doesn’t simply wait for consumers to lodge complaints. A good example of this is the August 1, 2011 press release issued by the FHA about its actions against 240 FHA-approved lenders. The FHA has something called the Mortgagee Review Board which scrutinizes FHA lenders; the most recent outcome of that scrutiny includes “hundreds of administrative actions against FHA-approved lenders who failed to meet its requirements” according to the press release. The Mortgagee Review Board, or MRB for | more...

July 29, 2011

FHA Loans For Homes Near Airports and Runways

By Joe Wallace

The location of the home an FHA loan applicant wants to purchase affects many things connected to FHA loan approval. The FHA loan limit is a good example–these limits are set by county and vary depending on the housing market in a given area. Homes located in some counties may have requirements based on local building codes other areas don’t require. And some properties may get closer scrutiny if they are located in or near flood zones or other areas identified as prone to natural disasters. With all that in mind, some borrowers may worry about the eligibility of a particular home for an FHA loan based on its proximity to airports or military air fields. Is a property rendered ineligible for an FHA home loan because it is in | more...

July 28, 2011

FHA Loans, the Fair Housing Act, and Discrimination

By Joe Wallace

Elsewhere on this blog, we’ve mentioned the policies of the FHA, Department of Housing and Urban Development, and federal law designed to protect borrowers from discriminatory practices in real estate lending and related areas. FHA home loans are, by federal law and program requirements, intended to be available to all qualified applicants regardless of race, color, national origin, religion, sex, familial status or disability. But some people still don’t understand the full implications of these laws, which extend to rentals and homeowners associations, not just the lending process. A July 20, 2011 press release from HUD describes charges against a Wisconsin landlord accused of violating the Fair Housing Act by “allegedly establishing different terms for a single mother

July 27, 2011

FHA Roof Requirements

By Joe Wallace

One frequently asked questions about the FHA loan process is about roof requirements. When a buyer views a home and decides to make a commitment to buy using an FHA insured mortgage, the sale of the home cannot proceed until the property has been reviewed by an FHA approved fee appraiser. It’s the appraiser’s job to look over the home, make sure it meets FHA standards, and assign it a fair market value. FHA standards include making sure the property is safe, livable, and has no obvious structural issues or defects within the scope of the appraisal. (An appraisal is not a home inspection and borrowers should never accept an appraisal as a guarantee that the home is defect-free.) That includes the roof–FHA and HUD regulations say it must not | more...

July 27, 2011

FHA Condo Loans: Who Approves the Condos?

By Joe Wallace

FHA loan applicants looking for a condo loan have several options open to them when it comes to finding a project that is FHA-approved. The Department of Housing and Urban Development along with the FHA maintain a list of approved condo projects eligible for FHA loans, which is searchable by city, state, and other factors. You can find that list here: https://entp.hud.gov/idapp/html/condlook.cfm But is the existing list the only resource FHA borrowers have to find a condo project? What if the buyer finds a suitable condo that is not yet FHA approved? Thanks to the Housing and Economic Recovery Act (HERA) of 2008, changes have been made to the FHA condo project approval process, effective for all case numbers issued after December 7, 2009. According to the official site, “FHA | more...

July 26, 2011

Can FHA HECM Loans Become Delinquent?

By Joe Wallace

In troubled economic times, FHA borrowers can get into trouble on their mortgages because of reduced income, higher prices and other issues. FHA and conventional borrowers know that missing one payment isn’t necessarily the road to foreclosure, but such problems should be addressed quickly to avoid going into loan default and/or foreclosure proceedings. Those with Home Equity Conversion Mortgages wouldn’t seem to be affected in the same way, since a HECM loan is designed to give the borrower access to funds supplied using the equity in the property as the security for the loan. There are no monthly payments and the loan is satisfied once the borrower dies or sells the home–once the home is sold, the loan is paid off in full, So how is it possible that an | more...