Articles Published in: January 2015

January 31, 2015

FHA Loan Rules On Appraisals and Required Corrections: A Reader Question

A reader asks, “Is the seller responsible to pay for all repairs before closing?” Assuming that this reader question is in reference to required corrections or alterations to a home listed by the FHA appraiser, much depends on the type of repairs or corrections required. If repairs or corrections are required to fix hazardous conditions, those fixes must happen and a compliance inspection (where required) must occur before the loan can be approved. Let’s see what HUD 4155.1 Chapter Four says about the appraisal process and required corrections: “In the performance of an FHA appraisal, the appraiser must • denote any deficiency in the appropriate section(s) of the appraisal report (site issues in the site section, improvement issues in the improvements section, and so on), and • note those repairs | more...

January 30, 2015

FHA Mortgage Loan Rules For The New Mortgage Insurance Premium Cuts

By Joe Wallace

A great deal of reader questions have come in about the FHA’s recent move to cut the annual mortgage insurance premium on FHA loans with case numbers assigned on or after January 26 2015. We thought it was a good time to remind our readers and clarify what the FHA has announced with respect to mortgage loans affected by this new rule. Which mortgage loans are affected by the FHA MIP cuts? According to the FHA mortgagee letter (ML) announcing the cuts, “This ML reduces the rate for annual MIP for all Title II forward mortgages, with terms greater than 15 years, except; –single family forward streamline refinance transactions that are refinancing existing FHA loans that were endorsed on or before May 31, 2009; –Section 247 mortgages (Hawaiian Homelands) Borrowers | more...

January 30, 2015

FHA Loans and Non-Existent Credit After Bankruptcy: A Reader Question

By Joe Wallace

A reader asks, “My wife and I filed chapter 7 and lost our homes to foreclosure in 2009 after having lost our mortgage company in the crash of 2008. We haven’t needed credit and haven’t borrowed any money since. Our bank pulled our credit and found we have “no score” because of not having borrowed in the last 5.5 years. What would we have to do to get an FHA mortgage?” According to a Frequently Asked Questions section of the FHA official site, borrowers who have a Chapter 7 Bankruptcy in their credit history should know the following information: “A Chapter 7 bankruptcy (liquidation) does not disqualify a borrower from obtaining an FHA mortgage if at least two years have elapsed since the date of the discharge of the bankruptcy. | more...

January 29, 2015

FHA Refinance Loans: Another Chapter 13 Question

By Joe Wallace

We have gotten a large volume of reader questions about refinancing a home while in Chapter 13 bankruptcy. Here’s the latest: “We have current mortgage, never behind on payment. We like to refinance our home mortgage, but we are discharge from Chapter 13 before couple months! How long we have to wait and are we are qualified? Thank you in advance!” Let’s examine what the FHA official site has to say about FHA loans and bankruptcy. It’s important to note that all situations vary including the rules at one financial institution compared to another. Some lenders may be willing to work with certain borrowers in circumstances that others would not–just because the FHA loan rulebook has provisions for borrowers to apply for loans while the applicant is dealing with a bankruptcy or the discharge | more...

January 29, 2015

Lower MIP On FHA Loans: A Reader Question

By Joe Wallace

A reader asks, “What’s the lead time on case cancellation requests? With new case number requests?” The reader is asking about FHA loan case number cancellation requests made possible for a limited time to help qualified FHA borrowers take advantage of the new, lower annual Mortgage Insurance Premiums announced earlier this month by the FHA and HUD. We wrote about this in a blog post titled, FHA Mortgage Premium Cuts Begin Today. That article includes the following information: “On Thursday, January 8, 2014, the FHA and HUD issued a press release announcing a cut to the FHA’s required annual mortgage insurance premiums, also known as MIP. According to the press release, “As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro today announced the | more...

January 28, 2015

FHA Mortgage Loan Trends

By Joe Wallace

FHA mortgage loan rates kicked off the week more or less unchanged, best execution-wise–the previous two business days had some improvements in rates following a “consolidation” ahead of a highly anticipated announcement from the European Central Bank that had great potential to affect mortgage loan rates depending on investor reaction to the contents of that announcement. With the ECB announcement come and gone, and rates improving after another highly watched announcement by the Fed here at home, we find rates moving back to lows some sources report going down to 2013 levels. That’s great news for those looking for 30-year fixed rate conventional mortgage loans as the best execution rate for those loans has moved to about 3.625% depending on the lender. That rate is not available to all borrowers | more...

January 28, 2015

FHA Loans, Co-Signing, and Student Loan Debt: A Reader Question

By Joe Wallace

A reader asks, “I co signed for a student loan for my daughter who has 2 1/2 years left of schooling. This puts her at around 3 years out before needing to start making payments on this debt. i’m looking to get pre approved for a mortgage in the next 6 months. Does the loan, being 3 years out before repayment begins act negatively towards a FHA loan approval?” FHA loan rules do include scrutiny of any debt the borrower may be liable to repay as a co-signer, but individual lender standards may vary. However, the timing of the student loan debt in this case may play a positive role. Let’s look at what HUD 4155.1 says about student loan debt in general in connection with an FHA loan application. | more...

January 28, 2015

Chapter 13 Bankruptcy and FHA Refinance Loans: A Reader Question

By Joe Wallace

A reader asks, “Is It possible to refinance while in chapter 13 for a lower rate. We Don’t qualify for the government HARP program.” FHA loan rules for getting new loans when it comes to bankruptcy allow the lender to exercise some discretion depending on circumstances, but depending on the type of bankruptcy a borrower may also need the court’s permission to apply. Borrowers in Chapter 13 bankruptcy have some options according to HUD 4155.1 Chapter Four Section C which states: “A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA-insured mortgage, provided that the lender documents that –one year of the pay-out period under the bankruptcy has elapsed –the borrower’s payment performance has been satisfactory and all required payments have been made on time, and –the | more...

January 27, 2015

FHA Loans, Seasoning Requirements and Legal Assistance: A Reader Question

By Joe Wallace

A reader asks, “Have a question on issue of a legal settlement made on property ,, money to settle suit was borrowed on a promossory note and given to attorneys… few months later owner gave a lien to individual in case of untimely death , deed clearly states that it was NOT a home equity loan and title company agrees that the property is not subject to home equity rules etc,, A reverse mortgage lender tells me that it has to be seasoned as a home equity loan which kills the loan My attorney has shown lender that money borrowed from individual went to settlement funds and small attorney fee and was not an equity loan! There was no HUD or closing,, the lender gave me a clear deed! Surly there is | more...

January 27, 2015

FHA MIP Cuts: Who Is Affected? A Reader Question

By Joe Wallace

A reader asks, “I am a homeowner with a FHA loan. I bought the house last year, I wanted to know if this will also benefit me or is just for you new perspective home owners? Thanks…” This reader question is in reference to the FHA mortgage insurance premium cut that took effect on Monday January 26, 2015. According to an FHA press release, “the Federal Housing Administration (FHA) will reduce the annual premiums new borrowers will pay by half of a percent. This action is projected to save more than two million FHA homeowners an average of $900 annually and spur 250,000 new homebuyers to purchase their first home over the next three years.” We wrote about this recently when the cuts took effect. But who is affected by | more...