Articles Published in: 2013

April 9, 2013

FHA Loan Reader Questions: Foreclosure Waiting Period

A reader asks, “I’m in the process of obtaining a FHA Loan. I completed my Chapter 13 bankruptcy a year ago after completing five years of payments on time. My credit score is not an issue right now. All of my paperwork is in, or so I thought. My mortgage lender now tells me that I need a letter from the bankruptcy court saying that I’m allowed to get a loan.” “She says that this is a requirement of the underwriters. I think that the underwriter should only be asking for this if I was still in the bankruptcy, not now, when I’ve been cleared by the courts. What can I do?” The answers are not simple in a situation like this, and there are many details we aren’t privy | more...

April 8, 2013

FHA Loan Answers: Applying For A Loan After A Short Sale

By Joe Wallace

Home owners who need to ask about FHA loans after a short sale send us a good many of our most frequently asked questions. What do FHA loan rules say about borrowers trying to apply for a new FHA mortgage after a short sale transaction? According to HUD 4155.1 Chapter Four, “A borrower is not eligible for a new FHA-insured mortgage if he/she pursued a short sale agreement on his/her principal residence simply to • take advantage of declining market conditions, and • purchase a similar or superior property within a reasonable commuting distance at a reduced price as compared to current market value.” But that does NOT mean borrowers cannot apply for an FHA loan after a short sale–if you do not fit into the description above, and were | more...

April 5, 2013

Can A Family Have More Than One FHA Loan?

By Joe Wallace

A reader asks, “Is it true that married couple can only have one FHA loan?” The answer to this question depends on several different factors. What do the FHA loan rules say about having more than one FHA mortgage? If the married couple are obligated together on an FHA loan, there is generally no way to apply for a new FHA loan because of the residency requirement for the home purchased with an FHA mortgage. The rules in this area can be found in HUD 4155.1 Chapter Four, which says “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower. FHA will not insure a mortgage if it is determined that the transaction was | more...

April 4, 2013

FHA Loan Refinance Credit Rules: A Reader Question

By Joe Wallace

A reader asks, “I am trying to refinance my FHA loan with my current lender. I was refused they said, because my credit score is too low. I thought this did not matter? I thought the FHA STREAMLINE was intended for situations like ours.” “I have never been late or missed a payment in 4.5 years. My husband is doing well now and we are trying to get back to normal. Does the credit score count against you or not on the FHA streamline? And do the banks have a right to refuse the streamline if you are eligible?” There are several factors that must be considered when looking at a question like this. It’s true that FHA Streamline loans have no FHA requirement for credit underwriting which would include | more...

April 4, 2013

FHA Loan Rules For Loan Documentation

By Joe Wallace

FHA loans require paperwork. Whether it’s filled out on line, on paper, or using some combination of the two, there are several ares where borrower and lender must work together to complete. You’ll notice when filling out your FHA loan paperwork that there are requirements for certain types of information including credit history, your monthly financial obligations and much more. But did you know there are rules that govern how this information is handled by the lender? For example, one of the most important rules designed for the protection of the borrower applies to how the lender collects your signature and authorization for various steps of the FHA loan or refinance loan application process. The FHA loan rules spelled out in HUD 4155.1 state: “Lenders may not have borrowers sign | more...

April 3, 2013

New FHA Home Equity Conversion Mortgage Rules Take Effect

By Joe Wallace

In January of 2013, the FHA announced pending rule changes to its Home Equity Conversion Mortgage program (FHA HECM for short). Those changes were scheduled to take effect on 1 April 2013 and are now in full effect. In the FHA Mortgagee Letter HUDNo.13-010, the agency announced, “…the consolidation of the Federal Housing Administration (FHA) Home Equity Conversion Mortgage (HECM) Standard and HECM Saver initial mortgage insurance premium (MIP) and maximum principal limit factors for fixed interest rate mortgages.” The announcement states that the HECM Saver program is, as of 1 April 2013, the “only initial MIP option available to mortgagors who seek the predictability of a fixed interest rate mortgage and lower upfront closing costs.” The announcement adds, “Mortgagees shall designate HECM Saver as the initial MIP and use | more...

April 2, 2013

FHA Mortgage Insurance Premium Changes

By Joe Wallace

Effective on 1 April 2013, the FHA changed its mortgage insurance premium rules. We’ve discussed this at length in other blog posts, but now that the date has come and gone for the changes to take effect, it seems like a good time to review those changes. According to FHA mortgagee letter 2013-04, ““FHA will increase its annual mortgage insurance premium (MIP) for most new mortgages by 10 basis points or by 0.10 percent.” FHA MIP for Jumbo Loans is also going up. An FHA Jumbo Loan is basically described as mortgages at $625,500 or more. The increase on these loans is “5 basis points or 0.05 percent, to the maximum authorized annual mortgage insurance premium.” These MIP increases exclude “certain streamline refinance transactions.” The FHA describes these changes in | more...

April 1, 2013

FHA Condo Loans: What Defines A Condo?

By Joe Wallace

There are many different types of property you can buy with an FHA mortgage. Some borrowers are interested in suburban homes, others want a condo unit within the city. FHA loans do permit borrowers to buy condominium units with an FHA guaranteed mortgage, but there are additional rules for these purchases. One of the first things a borrower learns about purchasing a condo unit with an FHA mortgage is the rule found in HUD 4155.1 Chapter Four, Section B. It says, “FHA must approve condominium projects before a mortgage on an individual condominium unit can be insured.” Discuss this requirement with your loan officer to learn more about the FHA approval process and how it works in cases where the condo isn’t currently on the “approved” list. The approval issue | more...

March 29, 2013

Can I Apply For An FHA Loan On Good Friday?

By Joe Wallace

Good Friday is a common day off for many people. The Friday before the Easter weekend has many vendors, businesses and even the stock market takes a day off on this day. But if you’re looking for an FHA mortgage, you might be surprised to learn that you can talk to a lender, get prequalified and fill out FHA loan paperwork depending on the company–Good Friday is NOT a federal holiday so many financial institutions are open today. Because the markets which affect FHA loan mortgage rates are closed on Good Friday, the rates published on Thursday are likely the ones you will have access to today unless the lender reprices or issues a revised rate sheet on Friday. Of course, for those who wish to prequalify online, there’s no | more...

March 28, 2013

FHA Streamline Refinance Loans: Rules You Should Know

By Joe Wallace

FHA streamline refinance loans allow a borrower who has an existing FHA mortgage to refinance with no FHA-required credit check or FHA-required appraisal. FHA streamline loans work on the concept that the borrower has already qualified for the original FHA loan, so that qualifying data is used to get the home owner into the streamline refinance loan. These loans have certain rules that apply which don’t necessarily apply to other types of refinancing. For example, the purpose of the loan can come under scrutiny–the borrower must, in most cases, get a reduced mortgage payment or interest rate as a result of the new loan. Additionally, FHA loan rules state: “A transaction for the purpose of reducing the mortgage term must be underwritten and closed as a rate and term | more...