Articles Published in: 2011

September 29, 2011

FHA Loan Questions: What Is The Maximum For An FHA Streamline Refinance Loan?

FHA rules for Streamline Refinancing Loans changed in 2011, and there are updated guidelines borrowers and lenders need to know when trying to determine what the maximum loan amount might be for a particular borrower. Under the old rules (for cases assigned before April 18, 2011) there were two sets of guidelines. One set was for FHA streamline refinancing without an appraisal. For these loans, the old system allowed refinancing maximums that did not exceed the principal outstanding balance, minus any up front mortgage insurance premium refund, plus the amount of the new up front mortgage insurance premium (UFMIP). The old FHA streamline limits also included a “with appraisal” maximum which was based on the lower of the outstanding principal balance minus any UFMIP refund, plus closing costs and prepaid | more...

September 29, 2011

FHA Loans Charges Wisconsin Landlord With Violation of Fair Housing Act

By Joe Wallace

The FHA official site reports charges against a La Crosse, Wisconsin landlord for violating the Fair Housing act, “for refusing to rent an apartment to an African American couple because of their race.” FHA press release 11-228 says, “HUD brings the charge on behalf of the couple, alleging that Geneva Terrace, Inc. and Victoria Gerrard, the owner of Geneva Terrace Apartments, and property manager Nicolai Quinn refused to show an apartment to the complainants. Additionally, they falsely represented to the couple and other black applicants that no units were available, while informing white applicants of available units and encouraging them to apply. The Fair Housing Act prohibits housing discrimination based on race.” What does this have to do with FHA home loans? Refusing to rent to a qualified tenant based | more...

September 28, 2011

FHA Loans: What Do I Need to Pre-Qualify?

By Joe Wallace

If you’re considering a new home purchase, many will offer advice about pre-qualifying for an FHA home loan. A lot of borrowers who pre-qualify swear by this approach. It allows you to make serious choices about specific properties within your price range as determined by the pre-qualified FHA loan amount rather than finding a home, making an offer and hoping a loan can be approved for the right amount. But what does an FHA borrower need in order to pre-qualify for an FHA insured mortgage? For this discussion we’re not talking about credit scores or how much preparation time is needed to get your finances in order, but rather what information you specifically need to approach a lender via a website, by phone or in person. The first detail borrowers | more...

September 27, 2011

FHA Clarifies Rules on Annual Mortgage Insurance Premiums For Loans 15 Years Or Less

By Joe Wallace

The FHA has issued clarification on FHA insured mortgages with terms of 15 years or less and a Loan To Value Ratio of less than 78 percent or less. FHA loans with case numbers assigned on or after April 18, 2011 are affected by this clarification, which refers to the cancellation of the annual mortgage insurance premium or MIP. Earlier in 2011, the FHA issued Mortgagee Letter 2011-10 which clarified and updated FHA loan rules for MIP for affected FHA loan types. When it was issued, it did not address “forward” loans with terms 15 years or less as described above. According to the FHA, “Currently the annual MIP is canceled for mortgages with amortization terms of 15 years or less when the LTV reaches 78 percent.” FHA Mortgagee Letter | more...

September 26, 2011

How Can I Get a FHA Housing Counselor for an FHA Loan?

By Joe Wallace

Home buying can be an intimidating process, especially for first-time house hunters. That’s one reason why the FHA has a network of housing counselors and an assistance hotline available; if you’re looking for an FHA home loan and need help getting started, that assistance is definitely available. At the FHA official site, you’ll read the following; “Want advice on buying a home, renting, default, foreclosure avoidance, credit issues or reverse mortgages? HUD sponsors housing counseling agencies throughout the country to provide free or low cost advice.” When you call the FHA at (800) 569-4287, you’ll get access to a phone-based search system that can refer you to a housing counseling agency near you. You can also search for a housing counseling agency near you online at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm by using the | more...

September 23, 2011

FHA Loans and Minimum Cash Investment Requirements

By Joe Wallace

Borrowers new to FHA loans soon learn about the requirements to qualify for the loans, which include what the FHA calls a “minimum cash investment”, which is essentially a down payment of at least 3.5% of “the lesser of the appraised value of the property or the sales price.” But the down payment isn’t the only thing required as a minimum cash investment–something that cannot be rolled into the loan or otherwise financed. According to HUD Handbook 4155.1, “the borrower must have sufficient funds to cover borrower-paid closing costs and fees at the time of settlement.”. FHA requirements also state that any money used to cover these minimum costs must come from “acceptable sources”. FHA rules state the lender is responsible for verifying that all money for these expenses comes | more...

September 22, 2011

FHA Loans and Income Verification: “Future Income”

By Joe Wallace

Borrowers who apply for an FHA home loan are required to list all sources of income on the application. This is required for multiple reasons; the lender must calculate the applicant’s debt-to-income ratio to see if the borrower is able to afford the new mortgage payments if approved for the FHA loan. A borrower who has too much going out and not enough going in won’t qualify for an FHA loan. But there’s another reason for the requirement; an FHA lender is required to verify that the employment and income listed on the FHA loan application is genuine. The lender can’t simply accept on good faith that the data listed on the form is true. When the borrower is notified he or she has been approved for an FHA insured | more...

September 21, 2011

FHA Condo Projects: Non-Residential Space

By Joe Wallace

FHA condo loans differ greatly in some respects from typical, single-dwelling properties that make up a large portion of the FHA insured mortgage loans. Condos are unique properties–the multiple individual owners residing in a shared building have different agreements, covenants and requirements for condo living than their suburban home-dwelling counterparts. But in some cases, rules for FHA condo loans resemble suburban home loans a great deal. For example, FHA loans allow a borrower to purchase a mixed-use property under a set of conditions which include the requirement that no more than 25% of the total floor space be used for non-residential or commercial purposes. When it comes to these mixed-use mortgages insured by the FHA,

September 21, 2011

FHA Loans and Condo Conversion Projects

By Joe Wallace

Some FHA loan applicants are surprised to learn that FHA loans are available for condominiums. A condo, by definition, is a building that offers titles for individual units within the common structure. The FHA has rules for condo loans, including a requirement that the condo be on a list of projects approved by the FHA. Some building owners decide to convert their property into condominiums so they can sell the individual units. The FHA will consider such conversion projects for approval provided the condo units meet FHA standards. Such standards include a “one unit, one residence” requirement; each unit must be a separate entity and must be sold and occupied as such. FHA loan applicants looking for condo projects often wonder if the FHA will insure condo units in a | more...

September 20, 2011

Hope For Homeowners Program Near An End

By Joe Wallace

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...