Articles Published in: November 2014

November 18, 2014

FHA Extends Program For Underwater Home Owners

The FHA has announced an extension to a program started to help borrowers who are underwater on their mortgages. FHA mortgagee letter 2014-23 describes the original “FHA Refinance of Borrowers in Negative Equity Positions” program started in 2010 which, according to the FHA/HUD official site, “provided enhancements to the Federal Housing Administration (FHA) refinance program that gave a greater number of responsible borrowers an opportunity to remain in their homes.” These FHA enhancements were designed, “to maintain homeownership by providing borrowers, who owe more on their mortgage than the value of their home, opportunities to refinance into an affordable FHA loan. This opportunity allowed borrowers to qualify for an FHA refinance loan provided that the lender or investor wrote off the unpaid principal balance of the original first lien mortgage | more...

November 17, 2014

FHA Loan Answers About FICO Scores And Credit Requirements

By Joe Wallace

We’ve fielded a variety of questions recently about FHA home loans when it comes to FICO scores and credit requirements. There are several issues to be aware of when it’s time to start preparing for an FHA mortgage loan, or any kind of major credit application. One of the first questions you should answer for yourself at the start of your journey to buying a home with an FHA mortgage is, “How much time do I have?” Are you trying to plan for a loan that you want to apply for in a matter of months? If so, a revision of your timeline may be in order–finance experts recommend taking at least 12 months to plan for a new home loan. Why? Saving up for closing costs and other expenses | more...

November 14, 2014

More Revisions to FHA HECM Loan Rules and Guidelines

By Joe Wallace

The FHA has issue another set of revisions, clarifications, and consolidation to its Home Equity Conversion Mortgage Loan rules. An FHA mortgagee letter, 2014-21, adds a large number of changes and clarifications. Many of the new changes have to do with key parts of the HECM loan process including limits on the amount of funds that can be “advanced at loan closing and during the First 12-Month Disbursement Period after loan closing” and also explaining which fees and charges are “Mandatory Obligations” under the FHA HECM program. One change announced in the mortgagee letter affects those who are paying off a non-FHA HECM loan with funds from the HECM loan. According to the FHA, the new rules include the following instructions to the lender: “Mortgagees may only permit the payoff | more...

November 13, 2014

FHA Loan Credit Issues: A Reader Question

By Joe Wallace

A reader asks, “I am in the process of trying to rebuild my credit, but am finding it difficult to acquire in my own name. I have a bankruptcy discharged in Feb 2013. I make all utility, insurance and rent payments on time or within the allotted grace period. Altho I am financially responsible, I feel it may not reflect in my credit report with few or no recent accounts reporting…” “What length of time will impact my credit report/score with credit card usage?? …My mother recently obtained a small auto loan (on my behalf) thru a credit union to get the most affordable rate & payment option. She has me listed as co-signer, will this also report on my credit & impact my payment history & score as if | more...

November 12, 2014

FHA Mortgage Rate Trends: Up and Down

By Joe Wallace

Since our last report on FHA mortgage rate trends, we’ve seen some ups and down with mortgage loan rates in general, but the overall trend seems to be upward. Last Friday was a highly anticipated jobs report, and ahead of that last Thursday we saw rates hold steady. After the report came out on Friday mortgage loan rates did gain back some of the ground lost earlier in the week, but come Monday those gains began slipping away again. Tuesday was Veterans Day so markets were closed and there was no rate movement to report–but on Wednesday it was a bit of false hope to start the day with rates beginning stronger but ultimately weakening by day’s end. What does all this mean? At the time of this writing, 30-year | more...

November 12, 2014

FHA PMI Rules: A Reader Question

By Joe Wallace

A reader asks, “Does the PMI not apply to down payments of 20% and above?” The FHA has changed the rules for PMI–Private Mortgage Insurance–and as a result all FHA home loans known as “forward mortgages” with case numbers assigned on or after June 3 2013 now have different requirements than previously approved FHA mortgages. FHA Mortgagee Letter 2013-04 rescinded a set of FHA PMI rules and enacted new ones in their place. The rescinded rules include the following changes as described in FHA Mortgagee letter 2013-04; “…rescinds the automatic cancellation of the annual MIP collection announced in MLs 2000-38 and 2000-46; ….rescinds ML 2011-35, under which mortgages with terms of 15 years or less and LTVs of less than or equal to 78 percent at time of origination were exempt from the | more...

November 11, 2014

Happy Veterans Day 2014

By Joe Wallace

Today we pause from our usual routine of writing articles and answering your questions about FHA home loans, refinance loans, and reverse mortgages to remember the veterans who serve our country. Veterans Day is a special time for us to remember all those who serve the country at home and overseas. We owe many, many thanks to the men and women who sacrifice so much to protect our freedoms. Thank a veteran today and remember their service. Vets, from all of us, thank you for serving your country. Our regularly scheduled posts resume tomorrow. HAPPY VETERANS DAY 2014!

November 10, 2014

FHA Loan Down Payment Rules: A Reader Question

By Joe Wallace

A reader asks, “Do to my losing my job in 2011, I had my second home foreclosed on. I now live in my manufactured home on 2 acres here in Florida which is paid for. Up to my job lost, I have had great credit. I’m looking into buying a new manufactured home because my wife and I have our 2 adopted grandchildren now.” “An obvious question would be if we would be able to get a FHA home loan; and also, could our land be used as partial down payment?” FHA loan rules include a discussion on funds needed to close the deal. FHA loan rules in HUD 4155.1 state, “For purchase transactions, the maximum LTV is 96.5% percent (the reciprocal of the 3.5% required investment).” That means the borrower must | more...

November 7, 2014

FHA Loan FICO Score Requirements: A Reader Question

By Joe Wallace

A reader asks, “I have a question on the down payment assistance and credit scores. We have credit scores that average to 640 and 620. Our lender has asked us to either raise our scores or have a 2 month reserve in addition to our 3.5% down payment as a requirement for FHA/HUD is this standard?” FHA loan rules do specify a minimum FICO score for borrowers who want to qualify for the lowest down payment of 3.5%. That FICO score is 580. However, lender standards can and often are higher than that number. FHA loan rules do not prevent the lender from have more strict standards as long as they are applied in compliance with federal law, Fair Housing Act regulations, etc. Individual borrower circumstances can and often do | more...

November 6, 2014

FHA Loan Interest Rate Trends

By Joe Wallace

FHA mortgage loan rates are on the rise this week following upward pressure that started late last week after the Fed made an important announcement. The Fed decided to end Quantitative Easing, which is essentially a government stimulus program that invested in markets and helped keep mortgage rates lower thanks to those investments. Last week, when the end of the program was announced, investor reaction to the news put upward pressure on mortgage loan rates in general, kicking off a trend that continued late into the week resulting in four week highs for rates by 3 November. The numbers you’ll see reported below are listed as best execution rates, but suffice it to say that mortgage loan rates across the board have been affected by current conditions. For much of | more...