Articles Published in: 2012

November 12, 2012

In Honor of Veterans Day

The observed Veterans Day holiday is today–Monday November 12. But yesterday on November 11, there was an important ceremony honoring those currently serving and those who have served before. According to the VA official site, “The Veterans Day National Ceremony is held each year on November 11th at Arlington National Cemetery . The ceremony commences precisely at 11:00 a.m. with a wreath laying at the Tomb of the Unknowns and continues inside the Memorial Amphitheater with a parade of colors by veterans’ organizations and remarks from dignitaries. The ceremony is intended to honor and thank all who served in the United States Armed Forces.” Veterans Day, like Memorial Day before it, is a time to remember, to reflect, and to thank our men and women in uniform. Today we pause | more...

November 9, 2012

FHA 203(k) and Streamlined 203(k) Loans

By Joe Wallace

The FHA offers a home loan program known as the 203(k), which the FHA/HUD official site describes as a home loan guaranty from the FHA for the purpose of helping “homebuyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home.” The 203(k) program “fills a unique and important need for homebuyers. When buying a house that needs repair or modernization, homebuyers usually have to follow a complicated and costly process. The interim acquisition and improvement loans often have relatively high interest rates, short repayment terms and a balloon payment.” The FHA 203(k) option offers an alternative to this, featuring a single mortgage at a fixed or adjustable rate, | more...

November 8, 2012

FHA Relief For Rhode Island Storm Victims

By Joe Wallace

An FHA press release announces help for Rhode Island storm victims in the wake of Hurricane Sandy. According to the FHA/HUD press release HUDNo.12-169; “U.S. Housing and Urban Development Secretary Shaun Donovan…announced HUD will speed federal disaster assistance to the State of Rhode Island and provide support to homeowners and low-income renters forced from their homes due to Hurricane Sandy.” The help comes after a presidential declaration of a federal disaster area in Bristol, Newport and Washington Counties. “The President’s declaration allows HUD to offer foreclosure relief and other assistance to certain families living in these counties” according to the press release. “Families who may have been forced from their homes need to know that help is available to begin the rebuilding process,” said Donovan. “Whether it’s foreclosure relief for | more...

November 7, 2012

FHA Loan Rules For Flood and Hazard Insurance

By Joe Wallace

In the wake of Hurricane Sandy, it seems like a good time to review a recent FHA Mortgagee Letter which addresses issues regarding hazard and flood insurance payments. While not all FHA borrowers may be affected by either storm damage or the rules in this FHA mortgagee letter, those that are affected should know the latest FHA guidance. FHA mortgagee letter 2012-19, titled “Hazard and Flood Insurance Requirement Reminder” reminds lenders about the Department of Housing and Urban Development’s “existing servicing procedures as they pertain to releasing hazard insurance proceeds for damaged properties securing Federal Housing Administration (FHA) insured mortgage loans.” According to the letter, the FHA “standard mortgage document” requires that the mortgagee–the lender–is named as a “Loss Payee” on the hazard insurance policy issued in connection with an | more...

November 7, 2012

FHA Loan Reader Questions: Credit Rating Issues

By Joe Wallace

A reader asks, “My husband and I have been trying to get approved for a home loan since august and keep getting denied. His credit is OK but my score is in the high 5s. I believe we have more than enough income to afford a house but dint know what else to do. Please help with some information on how we can get approved or how.” Questions like these have tough answers for some borrowers because the answer is basically that a credit score in the “high fives”, which we interpret to mean a FICO score in the high 500 range, isn’t good enough for many lenders in the current lending climate. While FHA does have more lenient FICO score minimums, many lenders don’t observe those bare minimums. The | more...

November 6, 2012

FHA Short Refinance Program Enhancements

By Joe Wallace

Earlier in 2012, the FHA announced some changes to its FHA Short Refinance program, which was originally announced in 2010 in a Mortgagee Letter titled ” FHA Refinance of Borrowers in Negative Equity Positions”. This program, also known as the FHA Short Refinance, is designed to allow “responsible homeowners with negative equity an opportunity to refinance their homes. These enhancements were designed to maintain homeownership by providing borrowers with conventional loans, who owe more on their mortgage than the value of their home, opportunities to refinance into an affordable FHA loan.” “This opportunity allows only non-FHA insured loans to qualify for an FHA refinance loan provided that the lender or investor writes off the unpaid principal balance of the original first lien mortgage by at least 10 percent.” The changes | more...

November 5, 2012

FHA Loans: What is the 203(b) Home Loan Program?

By Joe Wallace

If you go to the FHA official site to do some research on your FHA loan options, it can be a bit challenging to navigate the programs–there are a lot of different types of FHA loans to choose from including the 203(b), the 203(k), and many others. Some borrowers want to cut through all the names, acronyms, and jargon to learn about the FHA’s basic home loan program. If you’re one of those people, know that the FHA 203(b) home loan program is the one you’re looking for. In the words of the Federal Housing Administration, the purpose of the FHA 203(b) loan is to “provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a | more...

November 2, 2012

FHA/HUD Announce Post-Hurricane Sandy Assistance For Connecticut

By Joe Wallace

A press release issued by the FHA/HUD announces help for FHA borrowers and others in Connecticut affected by Hurricane Sandy. According to HUDNo.12-168, “U.S. Housing and Urban Development Secretary Shaun Donovan today announced HUD will speed federal disaster assistance to the State of Connecticut and provide support to homeowners and low-income renters forced from their homes due to Hurricane Sandy.” The release adds that the President has announced federal disaster areas in Fairfield, Middlesex, New Haven and New London Counties, as well as Mashantucket Pequot Indian Reservation. According to the press release, “The President

November 1, 2012

What is the FHA Minimum Credit Score: A Reader Question About FHA Loans

By Joe Wallace

A reader asks, “What is the minimum credit rating score needed to be considered for an FHA loan?” This question comes up very frequently, and the answer is always a two-parter. For starters, borrowers should understand the FHA’s minimum FICO credit score requirements. These requirements are described on the FHA official site as follows: For FHA loans with case numbers “assigned on or after 10/04/10”, FHA loan rules state: When the decision credit score is:

October 31, 2012

FHA Energy Efficient Mortgages: Is Escrow Required?

By Joe Wallace

When learning abo0ut FHA home loans, escrow is one issue some borrowers have questions about. The FHA frequently asked questions pages include the following about escrow, which is governed by something called the Real Estate Settlement Procedures Act or RESPA: “Does RESPA require borrowers to maintain an escrow account? NO. It is the lender’s decision whether the borrower must maintain an escrow account for the purpose of paying taxes and other items. The HUD regulations only limit the maximum amount that a lender can require a borrower to maintain in an account.” That Q&A from the FHA official site seems to indicate that the FHA does not require escrow; indeed, it is the lender’s choice to require escrow or not. But are there situations where an escrow account may actually | more...