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Articles Published in: 2012

June 12, 2012

Bank Of America Settles Maternity Discrimination Claim

By Joe Wallace

A recent press release found at the official site for FHA/HUD announces, “Bank fund will compensate women denied loans because they were pregnant or on maternity leave”. According to the HUD press release 12-095, “The U.S. Department of Housing and Urban Development (HUD) announced today that Bank of America has agreed to pay up to $161,180 to settle allegations that one of the bank’s San Jose, California branches refused to refinance the mortgage of an Irvine woman because she was on maternity leave. HUD reached the agreement with Bank of America to resolve a Fair Housing Act complaint that had been filed by the Fair Housing Council of Orange County (FHCOC).” Those applying for any kind of home loan–including FHA guaranteed mortgages–may not be discriminated against due to pregnancy, family | more...

 

June 11, 2012

FHA Loan Reader Questions: Cash-Out Refinancing LTV Ratios

By Joe Wallace

A reader asks, “Can you explain the 95% LTV cash out refinance? When I talk with lenders they all say 85% is the maximum LTV for a cash out refinance. Thank you.” One official document published by the FHA, called the FHA Refinance Programs Comparison Matrix states under the heading Eligible Loan Types for an FHA Cash-Out refinancing loan at 95% LTV, ” FHA or conventional loan that is seasoned at least 12 months with last 12 payments made within the month due.

 

June 8, 2012

FHA Loans: Settlement Fees Required to Close The Deal

By Joe Wallace

FHA loan rules include guidelines on the settlement fees required to close the loan so the buyer can take possession of the property. For example, FHA loan rules state, “Lenders may charge and collect from borrowers those customary and reasonable costs necessary to close the mortgage loan”, but the very next line in those rules add, “Borrowers may not pay a tax service fee.” Borrowers who want to know the fees they are required to pay should take note; FHA loan rules say the lender is required to include “the sum of all fees and charges from origination-related charges in Box 1 on page 2 of the Good Faith Estimate (GFE).” What can those fees include? According to HUD 4155.1 Chapter 5 Section A “In addition to the minimum downpayment | more...

 

June 7, 2012

FHA Loans: Can Non-Taxable Income Be Used To Qualify For an FHA Home Loan?

By Joe Wallace

FHA loan rules require the lender to verify income sources listed on an FHA home loan application. Only income that the lender deems stable, reliable, and likely to continue can be used to qualify for the loan. Because of this, the FHA loan program has rules covering different types of income and what may or may not be used to qualify for the loan. Income that does qualify is used to calculate the borrower’s debt-to-income ratio–a critical part of the loan approval process. Too much debt and not enough income, and a borrower could face being rejected for the FHA mortgage. One area some borrowers have concerns with is the income from non-taxable sources such as Social Security payments, military allowances, government benefits and other sources. These income sources, when | more...

 

June 6, 2012

FHA Loans and Government Assistance Payments–Do They Count As Verifiable Income?

By Joe Wallace

One frequently asked questions about FHA home loans involves government benefits and/or government assistance payments. Can these income sources be used for the purpose of getting an FHA guaranteed home loan? Under the right circumstances, the answer is yes. It’s not automatic–the lender must verify the source of the income and also determine how long that income will last. According to HUD 4155.1 Chapter 4 Section E, “Income received from government assistance programs is acceptable for qualifying, as long as the paying agency provides documentation indicating that the income is expected to continue for at least three years.” Borrowers aren’t simply out of luck if that income will not last for three years; it can’t be used as income, but it can be considered in other ways according to the | more...

 

June 6, 2012

FHA Loans and Verifiable Income: Alimony, Child Support, and Maintenance Payments

By Joe Wallace

Borrowers applying for an FHA home loan have good reason to consider listing alimony, child support, and maintenance payment income on their loan applications. Not all wish to have this type of income included in their application data, but when accompanied by proper documentation and when verified by the lender, these types of “non-employment income” can be used to help calculate the borrower’s debt-to-income ratio for FHA loan approval. But what does the FHA require in order to verify and approve these income sources for the FHA loan? According to the FHA official site, “Alimony, child support, or maintenance income may be considered effective, if –payments are likely to be received consistently for the first three years of the mortgage –the borrower provides the required documentation” What does that documentation | more...

 

June 5, 2012

Home Buying Advice From The Department of Housing and Urban Development

By Joe Wallace

Buying a home for the first time with an FHA guaranteed mortgage can be an intimidating process until you understand how that process works. Financial experts recommend borrowers prepare at least one year in advance before searching for a home to buy; there are many things which need to be done before an FHA loan applicant should commit to house hunting. Budgeting, pulling your credit report, learning what expenses you’ll have to pay as part of the loan process…these are all important things to know before you start looking for that first home. Once the search for a new home does begin, there are other issues a borrower should know in advance about what to do when that dream home is located. When you’re ready to commit to a loan | more...

 

June 1, 2012

FHA Home Loan Appraisals: When Do They Expire?

By Joe Wallace

FHA home loans require an appraisal to establish fair market value and insure the property meets minimum standards. But many borrowers want to know how long the appraisal has until it expires and whether or not an appraisal can be re-used. There are several reasons why this question arises; a borrower may decide not to close on the deal and another FHA loan applicant may decide to purchase the same property, for example. Or a borrower and seller may take longer than expected to close the deal. What does the FHA say about these issues? According to the FHA’s property and appraisal requirements found on FHA.gov, “Effective for all case numbers assigned on or after January 1, 2010 the validity period for all appraisals on existing, proposed, and under construction | more...

 

May 31, 2012

FHA Loans and Student Loan Deferments

By Joe Wallace

A reader asks, “If applying for FHA and student loans are in deferment until after the closing date, does it have to show a year after the first payment is due? For example, if the payment is due July 1, 2012 does it have to show July 15, 2012 or later?” This question is addressed in the FHA loan rules spelled out in HUD 4155.1, Chapter 4 Section C. It’s covered in the section titled, “Borrower Liabilities: Projected Obligations and Obligations Not Considered Debt” and includes a list of things the FHA does not consider debt for the purposes of calculating a borrower’s debt-to-income ratio for an FHA home loan. Student loans are specifically addressed in this section, which states, “Debt payments such as a student loan or balloon note | more...