Articles Published in: October 2013

October 9, 2013

FHA Loan Reader Questions: Do I Qualify For an FHA Mortgage With “Confusing Circumstances”?

A reader asks, “I am formerly self employed with little if any income and own a home purchased prior to marriage and I have a 700+ FICO and perfect debt payment history. My husband is formerly self employed (5 years) and for 6 months now has been re-employed with former employer which laid him off during economic down turn. Husband has little or no credit history. With his rehire we will have to transfer. I don’t know if we can qualify for a home with the rather confusing circumstances. I don’t want to access my credit to find out we don’t qualify. What are our options?” The simplest, most direct answer to this type of reader question is “Call the FHA”. In situations like these, it’s a very good idea | more...

October 8, 2013

Minimum Down Payments for FHA Loans: A Reader Question

By Joe Wallace

A reader asks, “Chapter 7 bankruptcy discharged in Oct 2010. Credit score now around 670. The hardest thing I am finding is the ability to save for a down payment. What would be a minimum down payment that I would be required to have before I could get an FHA loan? Thanks.” Unlike VA mortgage loans, FHA home loans feature a minimum down payment, also known as a minimum cash investment. The down payment must not only be a certain percentage of the loan amount, but it is also required to come from approved sources that can be verified. Borrowers cannot, for example, take out a cash advance on a credit card or any other form of unsecured loan for the down payment. FHA loan rules describe the minimum down | more...

October 7, 2013

FHA Loans For More Than One Home: A Reader Question

By Joe Wallace

A reader asks, “I have recently split up with my girlfriend of 16 years we have never been legally married. She is not willing to refi to get my name off the house. I have not lived in the house for over a year and need to get another FHA loan on a house I am having built. I qualify financially. Is it possible for me to get another FHA loan since I no longer live in the house and the co-borrower does?” FHA loan rules discuss the guidelines for having more than one FHA loan in HUD 4155.1 Chapter Four Section B. That section says of this particular circumstance, “A borrower may be eligible for another FHA-insured mortgage if he/she is vacating a residence that will remain occupied by | more...

October 4, 2013

HUD Announces Settlement in Maternity Leave Discrimination Case

By Joe Wallace

The FHA/HUD official site has a recent press release announcing a settlement in a maternity leave discrimination case brought against a Wisconsin-based mortgage insurance company. According to HUDNo.13-149, “The U.S. Department of Housing and Urban Development (HUD) announced today that it has reached agreements to settle two Fair Housing Act complaints against Madison, WI-based CMG Mortgage Insurance Company (CMG MI), the nation’s largest provider of private mortgage insurance to credit unions.” That company has agreed to pay $30,000, “resolving allegations that it refused to insure the home mortgage loan of a married couple because the wife was on maternity leave, and that it maintained a written policy of refusing to consider the regular pay of women on maternity leave as income.” As the press release points out, federal law prohibits discrimination in | more...

October 3, 2013

FHA Loan Interest Rate Locks

By Joe Wallace

In recent weeks, we’ve seen a steady drop in mortgage loan interest rates, with VA and FHA mortgage loan rates going as low as 4.0% in some cases (though that rate is not available from every lender or to every borrower). FHA mortgage loan rates tend to be lower than conventional loan rates in terms of the “ideal rate” for well qualified borrowers with very good FICO scores and credit repayment history. But even for borrowers who don’t have spotless credit, the recent mortgage loan rate recovery has offered some applicants a better deal than they could have gotten a few months ago when interest rates were climbing steadily over a period of weeks. One question some borrowers have about period like these when rates are higher in some months | more...

October 3, 2013

FHA Commissioner Addresses Confusion Over FHA Loans During Government Shutdown

By Joe Wallace

FHA Commissioner Carol Galante issued a statement clarifying some confusion over the FHA’s ability to process new single-family FHA home loan applications during the government shutdown. According to a variety of sources including CNN.com and American Banker, earlier reports from the FHA mistakenly announced the agency would not issue new loans if the government shut down. Galante issued a statement to clear up the issue, saying, “The HUD Contingency plan posted on Friday mistakenly included incorrect information about a potential shutdown’s impact on the FHA single-family loan program,” HUD said in a statement. “FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans.” The original shutdown plan had mistakenly announced, “FHA will be | more...

October 2, 2013

Bad Credit FHA Loans? A Reader Question

By Joe Wallace

We get a lot of questions about FHA loans and bad credit. One of the latest examples comes from a reader who asks; “I am wanting to buy me a single family home but my credit is messed up. I know my score is bad! I am a single mother with 4 kids and I want my own house. I am in need of help on which way to go. Do I need to file chapter 13 or 7 or is there a way to get my credit fixed so that I can make another one of my dreams come true? Help me please.” While we cannot advise or answer questions on issues that fall outside how FHA loans work and their related issues (appraisals, Private Mortgage Insurance, etc.) | more...

October 1, 2013

FHA Loans and the Government Shutdown

By Joe Wallace

The FHA and HUD have issued guidance and information as to the status of FHA loan operations during a government shutdown. At the time of this writing, the following is considered active FHA policy–in a document titled HUD Contingency Plan 2013, under the section titled, “Single Family Housing”, we find this information which applies to FHA single family home loans: “The Office of Single Family Housing will endorse new loans under current multi-year appropriation authority in order to support the health and stability of the U.S. mortgage market. (FHA endorsements currently represent 15% of the market.) Approximately 80% of FHA loans are endorsed by lenders with delegated authority. The remaining 20% are endorsed through the FHA Homeownership Centers, leveraging FHA staff with a contractor that works on-site.” Additionally, “The Office | more...