Articles Published in: 2012

February 24, 2012

FHA Loan Assumptions: An Alternative To Short Sales?

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 21, 2012

FHA Title I Loans For Manufactured Homes: A Reader Question

By Joe Wallace

In 2011, one of our blog posts included information about FHA Title I loans for manufactured homes. These home loans can be used several ways, as mentioned in our post from last year;

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...

February 16, 2012

Historic Settlement Between Federal Government and Five Major Banks

By Joe Wallace

The Department of Housing and Urban Development recently announced a $25 billion settlement between the government and the five largest banks in the U.S. United States Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom Miller and Colorado Attorney General John W. Suthers announced the “landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses.” According to the press release, this is the largest federal-state civil settlement ever obtained and is the result of “extensive investigations by federal agencies, including the Department of Justice, HUD and the HUD Office of the Inspector General (HUD-OIG), and state attorneys general and state banking regulators across the country.” The settlement includes Bank of America Corporation, | more...

February 15, 2012

FHA Loan Questions: Is There Any Way Around My Bankruptcy?

By Joe Wallace

A reader asks, “Bankruptcy filed just 2 years ago, is there a way around that? Have a descent (sic) income, employment and debt to income ratio.” There are two types of bankruptcy borrowers sometimes ask about in these cases. One is Chapter 7, where the borrower has debts discharged. The other is Chapter 13, where borrowers have a restructured payment plan enforced by court order. For Chapter 7, FHA loan rules require a minimum two year waiting period from the discharge of the bankruptcy before a borrower may apply for a new FHA mortgage. There is no workaround for this two-year minimum, even when the borrower has tried to reestablish good credit and employment in the wake of the bankruptcy. However, for those who have filed Chapter 13 bankruptcy, FHA | more...

February 14, 2012

FHA Loan Debt To Income Ratios: Do Student Loans Count?

By Joe Wallace

FHA loans require the lender to calculate the borrower’s debt-to-income ratio to determine if the applicant can realistically afford to make a monthly FHA mortgage payment. The borrower’s debts are reviewed and compared to the amount of money coming in–if the ratio is within FHA requirements, the loan can be approved (assuming the borrower meets the other FHA loan criteria). Some borrowers are rightfully concerned about the amount of debt they bring to the bargaining table. Too much debt and the borrower could be denied the FHA home loan. But not all financial obligations are necessarily counted toward the borrower’s debt-to-income calculation. FHA loan rules say some debts, usually with 10 months or less remaining on the payment agreement, do not have to be counted. The lender may choose to | more...