Articles Published in: 2013

January 24, 2013

FHA Single-Family Home Loans: For Personal Use Only

One topic we’ve covered recently in blog posts and in our answers to reader questions concerns the permitted uses for single-family FHA home loans. Read what the FHA official site says about FHA policy (in general) on multiple FHA home loans for a single borrower: “To prevent circumvention of the restrictions on FHA-insured mortgages to investors, FHA generally will not insure more than one mortgage for any borrower (transactions in which an existing FHA mortgage is paid off and another FHA mortgage is acquired are acceptable).” FHA home loans for single-family properties also have a rule stating the borrower must occupy the property as the primary residence once the sale is complete. That is another rule designed to reinforce the “no investors” policy on these types of loans. Some borrowers | more...

January 23, 2013

FHA Loan Credit Requirements: A Reader Question

By Joe Wallace

A reader asks, “My wife’s uncle just passed away not to long ago and I want to keep his property in the family. I make very good money,but i only have a 590 credit score.How can I go about buying his property and keeping everything the way it always has been?” Without addressing the credit score issue, in general one good way to go about buying a home with an FHA home loan is to get pre-approved for a loan amount–fill out the online application at FHALoan.com (a private company, not a government agency) and work with the loan officer to get the property appraised. This process–pre-approval, appraisal, and etc.–is fairly typical for many borrowers. Credit scores are a separate issue. The FHA Loan program has minimum credit score requirements | more...

January 22, 2013

U.S. Bank Settles Discrimination Claim

By Joe Wallace

A press release on the FHA/HUD official site announces a settlement in a disability discrimination claim brought by HUD against U.S. Bank. According to HUDNo.13-008, “Minnesota-based U.S. Bank National Association will pay $12,000 to a loan applicant with disabilities under a Conciliation Agreement settling allegations that the bank required him to provide unnecessary documentation to establish he would continue receiving disability income for three years before they would approve his mortgage loan.” As the press release states, the Fair Housing Act makes it an offense to discriminate “in the terms and conditions of a loan based on a person’s disability, including by imposing different loan application or qualification criteria.” According to the press release, a complaint was filed with HUD after U.S. Bank required a borrower to show proof that | more...

January 18, 2013

FHA Home Loans On Investment Properties: A Reader Question

By Joe Wallace

A reader asks, “As a homeowner, can I purchase an investment property with a FHA loan? FHA loans for single-family homes are designed for principal residences, which means the borrower must intend to live in the home as his or her primary residence. FHA loan rules state, “To prevent circumvention of the restrictions on FHA-insured mortgages to investors, FHA generally will not insure more than one mortgage for any borrower (transactions in which an existing FHA mortgage is paid off and another FHA mortgage is acquired are acceptable). Any person individually or jointly owning a home covered by a mortgage insured by FHA in which ownership is maintained may not purchase another principal residence with FHA mortgage insurance except under the situations described below. Properties previously acquired as investment properties | more...

January 17, 2013

Paying The Up Front Costs Of Your FHA Loan

By Joe Wallace

The FHA loan program is designed to help borrowers get into an affordable home. However, those new to the FHA loan program might not realize there are up front expenses which must be budgeted for; unlike the VA loan program administered by the Department of Veterans Affairs, the FHA loan program does not feature a “no down payment” option. FHA home loans have a required down payment the FHA regulations describe as a “minimum investment”. FHA loan rules as found in HUD 4155.1 describe the up-front costs of an FHA loan (including the down payment) as follows: “Under most FHA programs, the borrower is required to make a minimum downpayment into the transaction of at least 3.5% of the lesser of the appraised value of the property or the sales | more...

January 17, 2013

Virginia Beach-based Realty Company Settles Discrimination Case with FHA

By Joe Wallace

The FHA and HUD have issued a press release announcing the settlement of a housing discrimination case involving a company in Virginia Beach, VA. According to HUDNo.13-006, “Virginia Realty Company of Tidewater, Inc., a property management company based in Virginia Beach, VA, will pay $82,500 to settle allegations that it refused to allow a Hispanic woman to apply for an apartment because she did not speak fluent English. Virginia Realty had a policy of not renting to persons with limited English proficiency. The Fair Housing Act prohibits discrimination in the rental of housing on the basis of national origin.” The press release adds a quote by John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity, who states, “Denying housing because a person does not speak English well violates | more...

January 16, 2013

FHA Loan Rules For Applications: Your Tax Returns

By Joe Wallace

As part of the home loan application process for FHA insured mortgages, applicants are required to furnish a set of paperwork that includes tax documents. According to the FHA loan rulebook, HUD 4155.1, in a section titled “Federal Income Tax Returns”, the rules tell the lender to get the applicant’s: • federal income tax returns for the most recent two years, both individual and business, including all applicable schedules, for self-employed borrowers, and • individual federal tax returns for commissioned individuals. ” The phrase “all applicable schedules” refers to things like Schedule C and other forms required. If you don’t know what Schedule C is, you likely have not needed to file one. (It’s for borrowers who report business income or self-employment income. FHA loan rules also state that the | more...

January 15, 2013

FHA Loans For Manufactured Homes: A Reader Question

By Joe Wallace

A reader asks, “My wife, 5 year old and I live in North Carolina with her parents b/c it simply costs too much to rent. Her parents purchased a manufactured home that is over 10 yrs old (1998) 3 years ago as well as the roughly 3/4 acre lot it sits on.” “The house itself does have a permanent foundation (Strapped or bolted to a PIP or masonry perimeter foundation, with no tow gear left in the crawl). They currently still owe significantly on the mortgage. I’ve been looking at the FHA sites out there for information but I haven’t learned an answer to my question. My question is, can my wife and I buy her parents house and land through a manufactured home loan when the house itself is | more...

January 14, 2013

FHA Loan Questions on Legal and Tax Issues Related to FHA loans

By Joe Wallace

There have been several questions lately about legal issues. Here’s one–a reader asks: “I live in a Michigan condominium that will have a special vote of our co-owners on 1/24/12 to determine if our association will make application under the HUD Review and Approval process (HRAP) to obtain FHA certification for our Association.” “In advance of this vote, our Board of Directors issued an opinion letter to our co-owners urging them to vote NO citing outdated 2008 FHA guidelines as the basis for their opinion, even though they are aware of the HRAP requirements that went into effect in 2010. If this proposal is defeated in our election, has by Board of Directors exposed my association to a potential discrimination suit because they intentionally mislead our co-owners in their opinion | more...

January 11, 2013

FHA Loan Credit Issues: A Reader Question

By Joe Wallace

A reader asks, “I have poor credit. I am a single mother of 4 and need to buy a bigger home. I have noticed reading several posts, that the lowest credit score FHA will accept is 580. Is this true in every case? After I was divorced my credit score dropped, big time. Everything was divided in court but at the time I was not working and it ruined my credit.” The answer to this question is likely one the reader doesn’t want to get. The reader asks if the FHA minimum credit score requirement is true in every case, and the short answer is “No”. However, the reason is due to the lender’s additional requirements for credit scores, not a more lenient loan policy on the FHA’s part. The | more...