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Articles Published in: May 2012

May 18, 2012

HUD Studies Reveal Important Benefits Associated With Housing Counseling

By Joe Wallace

A press release from the Department of Housing and Urban Development says FHA/HUD approved housing counseling offers significant benefits “for families who purchase their first homes and those struggling to prevent foreclosure”. Those benefits were the focus of two HUD research projects. According to HUDNo.12-085, ” HUD found housing counseling significantly improved the likelihood homeowners remained in their homes” . That finding comes from two housing counseling research projects, one that involved pre-purchase counseling and one focusing on foreclosure avoidance counseling by HUD-approved agencies. “Both the pre-purchase counseling and foreclosure counseling studies enrolled clients in the fall of 2009 and early 2010. HUD found that 35 percent of participants became homeowners within 18 months of pre-purchase counseling and only one of those buyers subsequently fell behind in their mortgage payments.” | more...

 

May 17, 2012

FHA Loan Reader Question: Down Payment Funds for FHA Mortgages

By Joe Wallace

A reader asks, “Just for clarification, can tax credits be used in calculating the required down payment? I have always been told they can not. Also if they use a credit card for a deposit it can not be used in the calculation. Is this correct?” Tax credits are not included in the FHA’s list of acceptable down payment fund sources. Credit cards are also not listed as acceptable sources; while the FHA does permit “collateralized loans” as a down payment source, the credit card would be considered an uncollateralized loan. This is because there is nothing to secure the loan when paying with a credit card. With a car loan, the car itself acts as collateral, the same as with a mortgage loan where the house itself secures the | more...

 

May 16, 2012

FHA Loan Reader Questions: Loan Approval For Self Employed Borrowers

By Joe Wallace

A reader asks, “Is it true that FHA will not approve a loan if you have only been self-employed at your current business for 1 1/2 years? Applied for an FHA loan, was self-employed in a retail business for 5 years, sold my interest in the business and opened another retail business. My newest business has been open 1 1/2 years. Can I still get financed (credit score and debt to income ratio is excellent)?” The FHA loan rules are clear about minimum employment times in general–there are no minimum requirements for the amount of time spent on any one job. According to HUD 4155.1, Chapter , Section D; “To be eligible for a mortgage, FHA does not require a minimum length of time that a borrower must have held | more...

 

May 15, 2012

FHA/HUD Advice on Closing The Deal on Your New Home

By Joe Wallace

There are many things about closing the deal on a new home that first-time home buyers should understand before getting to the bargaining table. Do you know, for example, what information should appear on a Good Faith Estimate, or how to compare that estimate to your HUD-1 Settlement Statement? Some borrowers are surprised to learn that some cost adjustments may be necessary at closing time. According to the FHA official site, “At settlement it is usually necessary to make an adjustment between buyer and seller for property taxes and other expenses. The adjustments between buyer and seller are shown in Sections J and K of the HUD-1 Settlement Statement.” Property taxes are just one area where the borrower should come to the bargaining table knowing what to expect. In the | more...

 

May 15, 2012

FHA Loans: Rights and Responsibilities

By Joe Wallace

According to the FHA and HUD, FHA loans come with certain rights and responsibilities. Some borrowers don’t realize they have these rights or know what the lender’s obligation to the borrower might be under FHA/HUD rules and the Real Estate Settlement Procedures Act (RESPA). Knowing makes for an informed borrower–someone empowered to take action in cases where the borrower feels something isn’t quite right. How well do you understand the following? The Lender’s Duty To Respond To Complaints According to the FHA official site, any borrower with problems with the servicing of a home loan is entitled to a response from the lender. In cases where you aren’t getting that response, the FHA urges you to “Write to your servicer and call it a ‘qualified written request under Section 6 | more...

 

May 11, 2012

FHA and HUD Announce $202 Million Settlement With Deutsche Bank and MortgageIT

By Joe Wallace

The Federal Housing Administration and the Department of Housing and Urban Development have announced a multi-million dollar settlement with Deutsche Bank and MortgageIT following a government lawsuit filed in 2011. According to an FHA/HUD press release, the United States government filed suit last year against MortgageIT (owned by Deutsche Bank) for “repeated false certifications to HUD in connection with the residential mortgage origination practices of MORTGAGEIT, a wholly-owned subsidiary of DEUTSCHE BANK AG since 2007.” The press release adds, “The suit alleges approximately a decade of misconduct in connection with MORTGAGEIT

 

May 10, 2012

FHA Loan Reader Questions: Flood Zones

By Joe Wallace

A reader asks, “I live in a town that is considered a flood area regardless whether you’re on a hill or in the valley…will the FHA do a manufactured home loan considering the area?” FHA loan rules are specific when it comes to flood zones,and make a distinction between areas prone to flooding and something called the Special Flood Hazard Area (SFHA). The lender must make a determination whether a home is located in one of these special areas where appropriate. Your lender will likely require flood insurance as a condition of the loan when the property is in a known flood area. However, when a home is located in or near a Special Flood Hazard Area, the rules vary depending on the type of home. For example, where new | more...

 

May 8, 2012

FHA Appraisal Questions and Answers

By Joe Wallace

There are many frequently asked questions about FHA appraisals, and while this is not meant to be an exhaustive list of answers, we do cover some of the most common questions here: Am I required to get an appraisal for an FHA home loan? The FHA rules say all properties to be purchased with an FHA mortgage must be appraised by an FHA appraiser. There is only one type of exception–the FHA rules permit “certain streamline refinance transactions” to be processed without an appraisal. It’s important to remember that a lender is free to require an appraisal even when the FHA does not require one. What is the FHA policy on reusing appraisals? The official word on this subject is found in the HUD publication 4155.2. The section titled “FHA | more...