Articles Published in: December 2014

December 30, 2014

FHA Sets New Foreclosure Sales Policy

The FHA and HUD have updated policies related to the sales of foreclosed homes for “all defaulted FHA insured mortgages” with sales scheduled on or after 1 February 2015. According to Mortgagee Letter 2014-24, Increasing Use of FHA’s Claims Without Conveyance of Title (CWCOT) Procedures, the following guidelines will apply to those home sold after the date mentioned above: “Unless otherwise required by statute or jurisdiction, mortgagees are to use the Commissioner’s Adjusted Fair Market Value (CAFMV) for all foreclosure sales and Post-Foreclosure Sales Efforts associated with defaulted FHA insured mortgages when all of the following criteria are met: A.The FHA mortgage insurance is still active for the FHA Case Number; B. The FHA-insured loan is not subject to indemnification. (Note: Items A and B may be verified by checking Neighborhood Watch); C. | more...

December 29, 2014

FHA Loan Eligibility: A Reader Question

By Joe Wallace

A reader asks, ” I bought a home back in 97 I was in the military at the time and in 1999 it went for a short sale and unfortunately they charged my entitlement to my certificate of eligibility $36,000 I got screwed they said they were saving me from foreclosure but in reality I sold the house for more than what I bought it for but now they say I owe that money to get my COE reinstated.” “So that’s why I am now considering using a FHA home loan. My question to you is would I be eligible for the 3.5% down payment with a credit score of 650 and a discharge BK over 2 years its actually 2 1/2 years.” The FICO score portion of this question | more...

December 26, 2014

FHA Loan Reader Questions: Principal Reduction

By Joe Wallace

A reader asks, “I am owner/occupant of a 4 unit residential apartment Bldg which I built 37 years ago. it was successful until wacancies took over after the crash, I have funded the payments with my cash flow but it is now getting lower and lower and need my 6% reduced to the 3% rates with help i a small principal reduction.” This falls far outside the FHA single-family home loan program. The reader doesn’t indicate in the question whether the original loan was an FHA-guaranteed mortgage or not, but in any case, a borrower who seeks a principal reduction needs to work with the lender to see if this is possible. A refinance loan option may be possible depending on the circumstances and the lender, but again, this is | more...

December 24, 2014

Happy Holidays!

By Joe Wallace

From all of us here, have a safe and happy holiday! We pause from our usual posts about FHA loans, answering reader questions, and FHA news to celebrate the season. Our regularly scheduled posts will return on Friday. Thanks for reading and we hope your holiday time is filled with joy. –The Staff at FHANewsBlog.com

December 23, 2014

FHA Loan Reader Questions: Credit Scores for Co-Borrowers

By Joe Wallace

A reader asks, “Hi wanted to know if my gf has income and a co signer or co borrower can see be able to get an FHA loan if her credit ain’t high but the co person is high.” The answer to this question may depend greatly on the lender, the circumstances, and whether the borrower has compensating factors that might offset a lower FICO score. FHA loan rules spell out minimum credit scores and the lender will also have minimum credit score requirements which must be met. The FHA loan rulebook, HUD 4155.1 in Chapter Four has rules which spell out some standards for credit for all applicants, co-borrowers, etc. Chapter Four says in part: “If a credit score is available, it must be used to determine the decision | more...

December 22, 2014

FHA Announces 2015 FHA Home Loan Guaranty Limits

By Joe Wallace

The FHA and HUD have announced the loan guaranty limits for 2015. FHA Mortgagee Letter 2014-25, which announces 2015 limits and policy for single-family “forward loans” for new purchases, FHA Streamline loans, and Home Equity Conversion Mortgages (HECMs). According to the mortgagee letter, “The minimum FHA national loan limit ‘floor’ is at 65 percent of the national conforming loan limit (which is $417,000 for a one unit property for the period January 1, 2015 through December 31, 2015). The floor applies to those areas where 115 percent of the median home price is less than 65 percent of the national conforming loan limit.” The FHA defines a high-cost area where the typical FHA loan guaranty rate may be different as follows: “Any area where the loan limit exceeds the floor is a high cost | more...

What you should know about FHA 203(h) Loans For Disaster Victims

December 19, 2014

FHA Loan Limits: A Reader Question

By Joe Wallace

A reader asks, “I only want about 40,000. What kind of credit score would I need? Thanks so much.” In many cases borrowers will typically find that lenders require average credit scores of around 620 or so (or better), but no two lenders operate exactly the same–you may find higher or lower FICO score requirements depending on the lender, the type of home loan, etc. This reader question seems to imply that the borrower wants to get a loan for a specific amount, but it’s important to understand how FHA loan amounts are determined. The FHA loan amount is set based on the sale price or the property, or the appraised value–whichever is lower. The loan amount can also be affected by adding things to the loan such as an | more...

December 18, 2014

FHA “Personal Loans”? A Reader Question

By Joe Wallace

A reader asks, “My credit scores a 654 i have a car loan at 22000 where i pay 328 a month and have a debt collector who i’ve already paid but still shows on my credit report. Is there any way I can get a 5000 dollar loan?” It sounds like this reader is asking whether the FHA loan program permits a borrower to apply for a personal loan guaranteed by the FHA. Or perhaps the reader is asking if it’s possible to apply for an FHA home loan for an amount far smaller than it would take to purchase a home. In either case, the answer is no. FHA loan rules do not permit the FHA single family home loan program to be used as a personal loan–FHA guaranteed | more...

December 16, 2014

FHA Loan Income Requirements: A Reader Question

By Joe Wallace

A reader asks, “I would like to know how can I get a FHA Loan if my husband and me just make 40.000 a year. I went on bankruptcy in Oct 2011. Right now I have no debts, no car loans. I need an answer as soon as possible, we are living place to place, we paid rent on time,but living with more people is difficult. Also we have $10.000 for a downpayment.” FHA loan rules have no specific minimum income requirements for loan approval. FICO scores are used to approve the loan, as is your employment history and the likelihood of your current employment to continue. One of the most important things related to the borrower’s income isn’t the amount of that income, but rather how the income is | more...

December 15, 2014

FHA HECM Loan Changes: A Reader Question

By Joe Wallace

A reader asks, “I have been trying for a few years now to obtain a FHA reverse mortgage for my condo in Staten Island…We were told that “spot” reverse mortgages are no longer available. Since our condo association will not consider having our entire complex become an FHA approved complex..and it seems every other complex in Staten Island feels the same way, we cannot access our equity which we need to augment our retirement income. Do the recent changes in FHA policy offer us any hope?” The FHA changed the rules for HECM loans in 2014 to include sweeping alterations of the requirements–there are new rules for payments depending on the nature of the loan (fixed or adjustable rate HECM loans), mandatory financial obligations and mortgage insurance. However, the changes | more...