Articles Published in: February 2014

February 6, 2014

FHA Electronic Signatures Policy

Recently the FHA announced it would accept electronic signatures or “e-signatures” on FHA home loan documents. These changes were announced in a press release and then described in greater detail in FHA Mortgagee Letter 14-03. The mortgagee letter explains that a wide variety of FHA loan products will accept e-signatures for many steps in the FHA loan process, though the actual sales contract will, at the time of this writing, continue to require a traditional signature. According to FHA Mortgagee Letter 14-03, “Unless otherwise prohibited by law or excepted below, FHA will accept electronic signatures on the documents referenced below (collectively referred to as “Authorized Documents”), provided that the mortgagee complies with standards outlined in this ML. –Mortgage Insurance Endorsement Documents: Electronic signatures will be accepted on all documents requiring | more...

February 5, 2014

FHA Loan Income Requirements–Is There A Minimum? A Reader Question

By Joe Wallace

A reader asks, “My credit score is 720 and is my first time to buy home , what is the minimum income to qualify to FHA or another Government loan?” There is no minimum income requirement for FHA home loans. Instead, the borrower’s income is analyzed and compared with the amount of the applicant’s monthly financial obligations. A calculation known as the debt-to-income ratio is used to qualify the borrower. According to the FHA loan rules found in HUD 4155.1, “When computing the debt-to-income (DTI) ratio, the lender must include the following recurring obligations: • monthly housing expense, and • additional recurring charges extending ten months or more, such as − payments on installment accounts − child support or separate maintenance payments − revolving accounts, and − alimony.” The rulebook | more...

February 4, 2014

FHA To Widen Acceptance Of Electronic Signatures On Home Loan Documents

By Joe Wallace

The FHA and HUD have issued a press release announcing a wider acceptance of electronic signatures on FHA loan documents. According to HUDNo.14-11, the FHA is granting “expanded authority to lenders to accept electronic signatures (e-Signatures) on documents associated with mortgage loans. The new policy allows e-Signatures on origination, servicing, and loss mitigation documents, as well as FHA insurance claims, REO sales contracts and related addenda. Current FHA policy allows for electronic signatures only on third party documents such as sales contracts and other documents not controlled by the lender” according to the press release. “By extending our acceptance of electronic signatures on the majority of single family documents, we are bringing our requirements into alignment with common industry practices,” said FHA Commissioner Carol Galante in the release. She adds, | more...

February 3, 2014

FHA Loan Reader Questions: Death of a Co-Borrower

By Joe Wallace

A reader asks, “What happens if your parent co-borrows the loan with you, and they pass away at some point before the loan is paid off?” This is a fairly open-ended question and the answer is just as subject to interpretation because there’s no single law or regulation that applies in such cases. The first place a borrower should look for answers in such cases is the language of the FHA loan contract–what does the contract specify if such a contingency is mentioned? FHA loan rule policies are not the first place to start looking in this case for one simple reason–state law will definitely have something to say about some part of the process. Does the borrower have inheritance issues to deal with in addition to the FHA loan | more...