Articles Published in: 2014

February 10, 2014

Maximum FHA Loan Amounts For New Purchase Home Loans: What The Rules Say

One of the most common questions about new purchase FHA loans–where the borrower wants to buy a home (as opposed to refinancing one) involves the maximum loan amount. What do FHA loan rules say about how much you can borrow? Is there a maximum dollar amount for the FHA loan? The answer isn’t as simple as quoting a dollar figure. The FHA loan rulebook doesn’t contain a single number that effectively limits the dollar amount. Instead, there are a variety of factors that may vary depending on where the home is located and other variables. The rules for FHA loan maximums are found in HUD 4155.1, Chapter Two Section A. Under the heading titled, “Maximum Mortgage Amounts For A Purchase” we find the following: “The maximum mortgage amount that FHA | more...

February 7, 2014

FHA Loans After Delinquencies On A Previous FHA Mortgage

By Joe Wallace

After the housing market crisis that started in 2007, many home owners found themselves in trouble on mortgages. Some simply walked away from their loans, others tried to avoid default and foreclosure, while still others initiated short sales or sold their property for the market value at the time which was most likely far less than they expected to get for the property. Picking up the pieces after something like that can be difficult, and many borrowers wonder if they could be eligible once more for an FHA home loan now that times have changed, markets have improved, and the financial positions of many have also gotten better. For some, the question is, “Can I get an FHA loan after having a past delinquency or going into loan default on | more...

February 7, 2014

FHA Loan Qualifications And Old Credit Problems: A Reader Question

By Joe Wallace

A reader asks, “I have the income qualifications, the credit score qualification, and the down payment amount. However I also have outstanding amounts from old debt collection agencies. Do old debt collections really matter if I have everything else? Do the amounts of these old collections matter also?” The answer to this reader question isn’t as simple as a yes or no reply–there are a number of factors that may apply. How large the old collections could be one of those factors, the nature of them, and how old they are may all factor into the equation. Lender standards would also play a part–some lenders may or may not be as forgiving as others depending. All that said, let’s examine what FHA loan rules say about the matter in HUD | more...

February 6, 2014

FHA Electronic Signatures Policy

By Joe Wallace

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...

January 31, 2014

FHA Loan Occupancy Rules: A Reader Question

By Joe Wallace

A reader asks, “With a FHA Arm 5/1 or Section 251 loan, how long do I have to live in the house before I can sell it?” This may seem like a tricky question. FHA loan rules for single family home loans found in HUD 4155.1 do list occupancy requirements. According to Chapter Four: “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied. FHA security instruments require a borrower to establish bona fide occupancy in a home as the borrower’s principal residence within 60 days of signing the security instrument, with continued occupancy for at least one year.” But that rule says nothing about the borrower’s ability to sell the property. Borrowers are | more...

January 30, 2014

FHA Loans, Credit Reports, And Identity Theft

By Joe Wallace

One of the most oft-repeated bits of advice related to FHA home loans or refinance loans is that it’s best to start early–at least a year in advance–when planning for an FHA loan application. One of the reasons to start early involves the length of time it can take to check your credit report to learn your credit score and to make sure there’s no erroneous data or evidence of identity fraud on your report. With recent headlines about credit card data being stolen from major retailers, this advice couldn’t be more helpful. The Consumer Financial Protection Bureau (CFPB) is urging customers of “big box” retailers recently in the news for data breaches and hacking problems to check their credit card activity and credit reports for signs of fraud or | more...

January 30, 2014

FHA Loan Refinancing: What You Should Know

By Joe Wallace

If you’re interested in refinancing your home loan with an FHA loan but have never explored your refinancing loan options before, there are a few things you should know about the FHA refinancing loan program that can help you make the best choices for your needs and wants. The rules which govern FHA loan refinancing are found in HUD 4155.1, Chapter Three (and elsewhere). In this portion of the FHA loan rulebook. we learn that FHA refinancing loans include the following: streamline refinances of existing FHA-insured mortgages made with or without appraisals no cash out refinances (rate and term) of conventional and FHA-insured mortgages, where all proceeds are used to pay existing liens and costs associated with the transactions cash out refinances How long a term is an FHA loan | more...