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Articles Published in: February 2012

February 29, 2012

HUD Charges Bank Of America With Violations of the Fair Housing Act, Discrimination

By Joe Wallace

FHA loan applicants should know their rights under the Fair Housing Act, which forbids discrimination in the terms and conditions of a loan to an individual based on disability. That includes setting a different standard or requiring different application processes for disabled FHA and conventional loan applicants. Under federal law, it is also illegal for a lender to ask about the nature or severity of a disability except in limited circumstances explained in the Fair Housing Act. The U.S. Department of Housing and Urban Development recently announced it is charging Bank of America with discriminating against homebuyers with disabilities.

 

February 28, 2012

FHA Announces Mortgage Insurance Premium Increase

By Joe Wallace

The Department of Housing and Urban Development and the FHA have announced a plan to increase FHA Mortgage Insurance Premiums. In a press release, HUD No. 12-037, it was announced, “As part of ongoing efforts to encourage the return of private capital in the residential mortgage market and strengthen the Federal Housing Administration

 

February 27, 2012

FHA Loan Reader Questions: Seller “Assistance” Limits

By Joe Wallace

We always encourage people to ask us questions about the FHA home loan process in our comments section, and one thing that definitely helps us to answer them properly is to provide as much specific detail about your question as possible. One reader asks, “Applying for an FHA Loan and was told that the assistance with closing costs on my loan floats. One day it could be 5.0% or 4.0%. Is that true?” It’s tough to know what the specific question is in this case, but most likely the reader is asking about seller concessions. These concessions are permitted by FHA loan rules, which state; “The seller and/or third party may contribute up to six percent of the lesser of the property

 

February 24, 2012

FHA Loan Assumptions: An Alternative To Short Sales?

By Joe Wallace

We get many questions about FHA home loans from our readers. Some of those questions concern short sales for FHA home loans, and FHA loan assumption. An FHA loan short sale is a transaction where the home owner, who coordinates with the lender, agrees to sell the home for less than the amount currently owed on the home. An FHA loan assumption is where a home owner agrees to transfer the property to a buyer under the terms of the original loan. According to FHA.gov, “All FHA-insured mortgages are assumable.

 

February 23, 2012

FHA Loan Reader Question: What Happened to the Hope For Homeowners Program?

By Joe Wallace

A recent reader question included a mention of the Hope For Homeowners program, also known as H4H. The reader was specifically asking whether it is possible to rent a property that qualifies under H4H. But what exactly is Hope For Homeowners? In 2008 the subprime mortgage crisis created a major problem for homeowners–and not just those risking loan default and foreclosure. Property values were falling and many who purchased their homes found themselves owing more money than their property was worth. In an attempt to stabilize the market, Emergency Economic Stabilization Act of 2008 was signed into law on October 3, 2008. Part of that new law included Hope For Homeowners, which was created to prevent qualified home owners from defaulting on their loans, and avert foreclosure. H4H allowed qualified | more...

 

February 23, 2012

FHA Loan Foundation Requirements For Manufactured Homes

By Joe Wallace

At the time of this writing, it’s more difficult to find an FHA home loan for a manufactured home than in years past. Even so, some borrowers may find lenders willing to consider an FHA loan application for a mobile home or manufactured housing. One reader wrote in recently to ask, “Are the requirements of the Permanent Foundations Guide for Manufactured Housing applicable to both FHA Title 1 and Title 11 loans?” To answer this question we need to reference the Foundation Compliance section of a document known as the HUD FHA HOC Reference Guide Manufactured Homes. Under Foundation Compliance, FHA and HUD requirements are clearly spelled out. “All foundation systems, new and existing, must meet the FHA

 

February 22, 2012

FHA Loan Income Requirements

By Joe Wallace

A reader asked us recently whether there were any minimum income requirements for FHA condo loans. While the FHA does not place a dollar amount or set a minimum income, it does have standards for verifiable income which must be met in order to qualify for the FHA mortgage loan. These standards have more to do with stability of income, and the ratio of monthly financial obligations to that income than the amount itself. The lender is required to determine whether the borrower can realistically afford the FHA monthly mortgage payment when factored in with the rest of the loan applicant’s obligations. So how does the FHA lender analyze the borrower’s income? FHA rules state clearly, “The lender must analyze the income of each borrower who will be obligated for | more...

 

February 20, 2012

FHA Loan Reader Question: Self-Employed Borrowers

By Joe Wallace

A reader asks, “Is it possible to get an FHA loan if the ‘gap’ in employment was due to starting your own business? I have 1099?s that show income, as well as pay stubs as a contractor with a contract in place. The company paying me wants to hire me full time as a w-2 employee.” FHA home loans require the borrower to verify employment, but the lender does not have to deny a loan simply based on alternative, non-traditional, or self-employment. However, the rules for these types of employment are a bit more stringent so that the loan officer may properly verify income. When you fill out an FHA loan application, you’re required to list your employment prior to the period of self-employment, plus list out specific details of | more...

 

February 17, 2012

FHA Loan Reader Question: Bankruptcy and Job Loss

By Joe Wallace

A reader recently sent us a lengthy comment as part of a request for assistance on FHA loan topics. He writes, “I had a foreclosure in a bk chap 7 that was discharged in Nov 2009. This was due to a job lost in 2008 like most of the country. I had to get unemployment for I went over one year looking for another job. I went back to work full time in Dec 2009…” We won’t reproduce the entire correspondence here, but we thought it important to address the issues mentioned above as there are plenty of other readers who may be facing similar circumstances. Is it possible to get a new FHA home loan with conditions like the ones previously mentioned as part of the borrower’s history? Let’s | more...