Articles Published in: 2012

March 8, 2012

What You Should Know About FHA ARM Loans

Did you know the FHA loan program gives borrowers the option of choosing an adjustable rate mortgage, also known as an FHA ARM loan? Adjustable rate mortgage loans offer an introductory interest rate which, according to the terms of the individual loan, change after the introductory fixed rate period. How long the introductory period may last can vary depending on the loan. Once the introductory rate period has elapsed, the adjustable rate is subject to a cap which can apply year-to-year, or over the lifetime of the FHA loan. The introductory interest rate is often lower than the fixed rate of conventional home loans, making ARM loans attractive to some borrowers depending on their financial needs and goals. ARM loans are comprised of four basic components; the index, margin, interest | more...

March 7, 2012

FHA Loan Rules: Down Payments

By Joe Wallace

There are several government-backed home loan programs available for qualified borrowers. Some programs are for a specific set of people, such as the VA insured loan program for eligible veterans, while others like the FHA insured mortgage loan program are intended for any qualified borrower. There’s sometimes a bit of confusion between VA loan rules and FHA home loan regulations because the two programs are insured by the government, albeit by different agencies. VA home loans, for example, feature a no-money-down option that is sometimes mistaken for a feature of the FHA home loan program. Occasionally we get a reader question asking if the FHA loan program offers a similar no down payment FHA mortgage or if first-time FHA loan applicants are required to make a down payment. All FHA | more...

March 7, 2012

President Obama Makes FHA Refinancing Loan Announcement

By Joe Wallace

According to a recent report by Reuters, millions of homeowners nationwide could save approximately one thousand dollars a year by taking advantage of a new plan for more affordable government-backed mortgages. President Barack Obama announced the plan on Tuesday, March 6; according to the Reuters report, it “would reduce fees on mortgages the Federal Housing Administration insures so as to enable borrowers with higher-cost FHA loans to refinance.” Shortly after the announcement and the Reuters story was published, the FHA issued a press release on the new plan. According to HUD No. 12-045, “FHA ANNOUNCES PRICE CUTS TO ENCOURAGE STREAMLINE REFINANCING“, the new program changes the amount of Up Front Mortgage Insurance Premiums, effective June 11, 2012. The press release states, “Today, Acting Federal Housing (FHA) Commissioner Carol Galante announced | more...

March 6, 2012

Reader Question: FHA Loan Rule Changes On Collection Actions

By Joe Wallace

In a recent blog post we reported the FHA’s announced changes to its rules concerning collections, court judgments, and payoffs of those actions. FHA mortgagee letter 2012-3 published new instructions for FHA lenders added to HUD 4155.1 .4C.2.E. which now says, “If the total outstanding balance of all collection accounts is equal to or greater than $1,000 the borrower must resolve the accounts (e.g. entered into payment arrangements with minimum three months verified payments-paid as agreed) or paid in full at the time of, or prior to closing.

March 5, 2012

FHA Resources For Disaster Victims: The FHA 203(H) Loan

By Joe Wallace

Recent tornado clusters across the southern and midwestern United States have placed some communities in dire circumstances. In some instances entire towns have been damaged or destroyed by high winds and flying debris. Those who have FHA home loans should know about the resources available to them in the wake of natural disasters–borrowers and home owners are not left on their own to recover from storms, floods, and tornadoes. The first move a home owner should make, whether an FHA, VA or conventional borrower is to examine the Federal Emergency Management Agency’s Three Step Assistance Plan, which includes a list of frequently asked questions, application forms and what to do after you’ve applied for help. Help from the FHA comes in a variety of ways. The FHA 203(h) program, for | more...

March 2, 2012

FHA Loan Rule Changes: Collections, Judgments and Payoffs

By Joe Wallace

FHA loan rules are not set in stone, they are subject to change as new laws, new market conditions or other factors evolve. One set of recent changes to FHA mortgage loan rules has a direct effect on how some FHA loan applicants are approved–or disapproved–for FHA home loans. According to FHA mortgagee letter 2012-3, there are important revisions to the instructions for FHA lenders found in HUD 4155.1 .4C.2.E. which formerly stated: “FHA does not require that collection accounts be paid off as a condition of mortgage approval. However, court-ordered judgments must be paid off before the mortgage loan is eligible for FHA insurance endorsement.” Potential FHA loan borrowers who have outstanding debts sent to a collection agency are directly affected by recent changes in that old rule. The | more...

March 1, 2012

Why Was I Rejected For An FHA Home Loan?

By Joe Wallace

We get many reader comments and questions about FHA insured home loans. Many of them involve the loan process, appraisal procedures and refinancing issues, but some people ask us why they were turned down for an FHA loan, or want to know about the rules concerning loan approval and denial. When an FHA home loan applicant is denied a loan, there are several things which must happen. Many borrowers rightly want to know the specific reasons they were turned down for a home loan and whether it’s possible to try again after addressing the concerns which led to having the FHA loan application denied. Did you know the lender is required to inform the borrower not only as to the reasons why the loan was turned down, but in some | more...

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