Articles Published in: 2013

May 28, 2013

HUD Settles Alabama Housing Discrimination Case

A press release issued by the FHA and HUD announces the settlement of a housing discrimination case in Alabama. According to HUDNo.13-077, “The U.S. Department of Housing and Urban Development (HUD) announced today that LLB&B, Inc., a real estate company based in Mobile, AL, will pay $29,000 as part of a Conciliation Agreement resolving allegations that one of its agents refused to show a condominium to a prospective homebuyer because he is African American. ” This violation of the Fair Housing Act came to light thanks only to a misdirected phone call. According to the press release, “The homebuyer alleged that he learned of the discrimination when the real estate agent inadvertently left a message on his telephone voicemail indicating her belief that white neighbors would ‘panic’ at the prospect of | more...

May 27, 2013

Remembering Our Veterans

By Joe Wallace

Memorial Day is traditionally a time to remember the sacrifices made by men and women in uniform. The writer Joseph Campbell once said, “A hero is someone who has given his or her life to something bigger than oneself.” Our veterans, past and present, have sacrificed plenty, and it’s only fitting to pause and give thanks whether silently in private or in a public event. Memorial Day is a time to reflect on the sacrifices made by those in uniform; this holiday is so much more than back yard barbecues, sales and a day when the banks are closed. The reason we’re able to enjoy our freedoms is due to what our people in uniform have done and continue to do. Those who have made the ultimate sacrifice for their | more...

May 24, 2013

FHA Loan Reader Questions: Buying a Home After a Short Sale

By Joe Wallace

A reader asks, “I did a short-sale last year, with total debt forgiveness and no delinquency judgement. I never missed a payment the 8 years I held the mortgage. It did not effect my credit which is currently 737.” “The bank did however report the short sale to the credit bureau and now I’m told it will be an issue getting an FHA loan. Lender says one thing, actual FHA website says another. I’m confused and discouraged. Advice?” The real issue here seems to be a disconnect between what the FHA loan rules say and the lender’s standards. If the FHA requires a certain minimum, but the lender has a higher standard, who is right? What standard is used to determine whether or not the loan can be approved? FHA | more...

May 23, 2013

FHA Announces Assistance For Homeowners in Oklahoma

By Joe Wallace

The FHA and HUD have announced disaster relief for victims of the recent tornado in Oklahoma. According to HUDNo.13-078, “HUD will speed federal disaster assistance to the State of Oklahoma in addition to resources being provided by Federal Emergency Management Agency (FEMA) and other federal partners. HUD will provide support to homeowners and low-income renters forced from their homes due to tornadoes and severe storms.” U.S. Housing and Urban Development Secretary Shaun Donovan has also reiterated current Federal Housing Administration policy, “that mortgage lenders should release insurance payments to homeowners rather than applying these funds toward outstanding mortgage debt” according to the press release. On Tuesday May 21, 2013, the President made a federal disaster declaration for Oklahoma counties including Cleveland, Lincoln, McClain, Oklahoma and Pottawatomi. A federal declaration allows | more...

May 22, 2013

FHA Loan Reader Questions: Closing Costs

By Joe Wallace

A reader asks, “Can you have the closing costs added to your mortgage loan in California? Or do you have to pay them before escrow closes?” Let’s see what the FHA loan rules, as described in HUD 4155.1, have to say about this. Chapter Five, Section A has a heading titled Settlement Requirements Needed To Close, which states: “Lenders may pay a borrower’s closing costs, and/or prepaid items by ‘premium pricing.’ Closing costs paid in this manner do not need to be included as part of the seller contribution limitation. The funds derived from a premium priced mortgage • may never be used to pay any portion of the borrower’s downpayment • must be disclosed on the GFE and the HUD-1 Settlement Statement • must be used to reduce the | more...

May 22, 2013

Foreclosure Avoidance: FHA Modifies Mortgage Rate Rules

By Joe Wallace

The FHA loan program requires borrowers to find a participating lender, negotiate terms, and come to an agreement on an acceptable mortgage loan interest rate. In general, the FHA and HUD do not set or regulate mortgage rates, except to require that such rates be “reasonable and customary” for the market. But the FHA has issued new guidance for mortgage rates as they apply to home loss mitigation/foreclosure avoidance programs as described in FHA Mortgagee Letter 2013-17. “The purpose of this Mortgagee Letter is to provide guidance for determining the interest rates to use when implementing FHA’s Loss Mitigation Home Retention options,” the document states, adding that the new policies described in ML 2013-17, “are to be implemented by mortgagees for Trial Payment Plans offered on or after July 1, | more...

May 21, 2013

FHA Loan Reader Questions: Foreclosure and the Three-Year Waiting Period

By Joe Wallace

A reader asks, “I had a home that Foreclosed in 2009. The Sheriff Sale was completed in December 2009, however according to the FHA office the claim on my home was not closed out until a little over a year later on January 14, 2011.” “Which means that instead of being in a position for another FHA Loan in 2012 we have to wait until January 2014, which is considered to be over 4 years since the Sheriff Sale. Why would it take so long between the Sale and the actual closing of the claim on the house? Is there anything I can do other than wait until 2014?” While we can’t address why it takes so long between a foreclosure and the sheriff sale, we can address the portion | more...

May 20, 2013

Can Veterans Apply For FHA Home Loans?

By Joe Wallace

There are many reasons why a veteran might not want to apply for a VA home loan and choose an FHA mortgage instead. One such reason involves eligibility issues–a borrower who has purchased a home with a VA mortgage in the past may have complications that hold up getting eligibility restored. Others might have a personal preference depending on the circumstances–but regardless of the reasons why a veteran decides to investigate FHA loan options, they are definitely open to those who serve. What do FHA loan rules say about veterans who want to apply for an FHA mortgage? According to HUD 4155.1, “Military personnel are considered occupant-owners, and are eligible for maximum financing if a member of the immediate family will occupy the subject property as his/her principal residence, whether | more...

May 16, 2013

FHA Reader Question: FHA Loans For Second-Time Home Buyers

By Joe Wallace

There are many myths and misconceptions about FHA home loans. One of them is brought up in our latest reader question in the comments section. A reader asks, “Do we have to be first time home buyers to qualify for an FHA loan?” The simple fact of the matter is, anyone who meets the financial qualifications can apply for an FHA home loan. You do NOT have to be a first time home buyer to qualify, and the financial qualifications include having a steady, dependable income that is likely to continue. Your debt-to-income ratio plays a part in loan approval, so potential borrowers who worry their bills are too high to qualify should contact the FHA or the loan officer about the rules covering debt/income ratios. Borrowers who are second-time | more...

May 16, 2013

FHA Loan Questions: Identity Of Interest Transactions

By Joe Wallace

One common question about FHA home loans involves the FHA rules about who can sell to whom. When it comes to a home owner selling property to someone they do not know, the rules are simple. FHA guidelines don’t allow a home owner with an “identity of interest” in the outcome of the sale to sell to an FHA borrower AND be a co-signer or co-borrower on the mortgage. What does that mean? According to HUD 4155.1 Chapter Four Section A, “A party who has a financial interest in the mortgage loan transaction, such as the seller, builder, or real estate agent, may not be a coborrower or a cosigner.” You can’t be both the buyer AND the seller. But what about in cases where the seller is a relative? | more...