Articles Published in: April 2015

April 30, 2015

“Second” FHA Appraisals: A Reader Question

A reader asks, “I am in the process of selling my home. There was an appraisal done and it came in low. We negotiated with the buyers on that appraisal. Now I am learning they got another appraisal that was higher so they could get a higher loan amount for closing costs but will not provide the appraisal to us.” “By the way, this is FHA and apparently the lender never filed the first appraisal with the FHA. Additionally, the lender has now changed their story stating they paid for the first appraisal and that the buyer paid for the 2nd appraisal and therefore they dont have to give it to us for re-negotiations. This cant be legal? And surely I have recourse? We are set to close tomorrow, and | more...

April 30, 2015

Recent Changes to FHA HECM Due And Payable Rules

By Joe Wallace

Recently the FHA and HUD announced further changes to the FHA Home Equity Conversion Mortgage or HECM loan program. There have been a number of alterations and adjustments to the FHA HECM loan program in the last year or so, and the new changes further clarify the rules for certain aspects of the HECM program. In this case many of the rule changes have to do with the procedures for declaring a HECM loan due and payable. According to FHA Mortgagee Letter 2015-10, “For HECMs that are due and payable, the Due Date is the date when: –the mortgagee notifies the Secretary that the mortgage became due and payable without HUDs approval; or–the Secretary approves the mortgagees request to call the mortgage due and payable. For HECMs with a Case | more...

April 29, 2015

FHA Updates HECM Loan Due And Payable Policies

By Joe Wallace

The FHA and HUD have announced more changes to the FHA Home Equity Conversion Mortgage (HECM) loan program. A recent FHA Mortgagee Letter, “Home Equity Conversion Mortgage (HECM) Due and Payable Policies”, and affects all FHA HECM loans that become due and payable on or after July 1, 2015. The updates affect a variety of areas including: –a requirement for mortgagees to provide HUD notice of a HECMs Due and Payable status;–a requirement for mortgagees to provide HUD notice of the initiation of foreclosure;–obtaining required appraisals;–sales of properties securing defaulted or performing HECM loans;–extensions available when marketing a HECM for sale and/or participating in Hardest Hit Funds programs;–curtailment of debenture interest for missed deadlines This mortgagee letter announces FHA’s position on when HECM loans (with case numbers issued before August | more...

What happens to my FHA loan in a natural disaster?

April 29, 2015

FHA Streamline Refinance Loans: A Reader Question

By Joe Wallace

A reader asks, “If I need to refinance to remove my ex-husband from my mortgage loan, and he has already signed the quit-claim and put the mortgage in my name only. Do I have to meet the normal 5% payment reduction requirement for the Net Tangible Benefit?” The borrower does not specify whether the refinance loan is an FHA Streamline Refinance loan or a cash out loan, but since this comment was on a post we did on FHA Streamline refinance loans, we’ll assume that’s the loan being asked about. FHA Streamline loans do require a “net tangible benefit” to the borrower as described in HUD 4155.1. That benefit could be a lower monthly payment, lower interest rates, or the fact that the borrower is refinancing from an Adjustable Rate | more...

April 28, 2015

FHA Mortgage Rate Trends: Higher Ahead Of Fed Announcement

By Joe Wallace

Mortgage loan rates shot up to highs we haven’t seen in around a month–Tuesday rates pushed higher ahead of two important economic data releases on Wednesday that have potential to push mortgage loan rates in one direction or the other depending on investor reaction to the contents of those releases. Wednesday morning sees the release of numbers from the first quarter Gross Domestic Product report (in the morning) and an announcement from the Fed (in the afternoon). The Fed event will be watched carefully as markets will react to any news that indicates whether or not the Fed intends to raise interest rates. That would have an effect, depending on how investors respond to the information, of pressuring rates higher or giving them a chance to recover from today’s move | more...

April 28, 2015

FHA Loan Program Changes To Help Prevent Foreclosure

By Joe Wallace

On Friday, April 24 2015, the FHA and HUD issued a press release detailing “significant changes” to the Distressed Asset Stabilization Program or DASP. According to HUDNo 15-048, “In an effort to better serve homeowners looking to avoid foreclosure, loan servicers will now be required to delay foreclosure for a year and to evaluate all borrowers for the Home Affordable Modification Program (HAMP) or a similar loss mitigation program.” “HUD is making additional improvements to the Neighborhood Stabilization Outcome (NSO) sales portion of DASP which are aimed at increasing non-profit participation. Updates include giving non-profits a first look at vacant properties, allowing purchasers to re-sell notes to non-profits, and offering a non-profit only pool.” That is a major alteration from the old standard, which permitted lenders to foreclose on a | more...

April 28, 2015

FHA Loan Rules For Purchasing A Second Home: A Reader Question

By Joe Wallace

A reader asks, “I applied for a fha loan my contract on the house I am to purchase expires Thursday. I found out Wednesday night that I have to apply for an exception for the 2 fha loan rule and the house I am currently in and have on the market is a fha. I did not know this.” “I qualify for both loans but have no clue how to apply for an exception. I am sure I should be able to get it as I travel 1 hr 10 mins to 1 hr 40 mins each way to work due to traffic increase over the years and the new home is only 10 mins from work. Help! My lender is now help and has dragged this on for several | more...

April 27, 2015

FHA Loan Appraisals and Lender Standards: A Reader Question

By Joe Wallace

A reader asks, “I have a client that is FHA approved, and has had their appraisal done but can not locate the well. Well and septic have been tested and municipality has signed off on both stating they were ok with the way they are.” “My clients lender says no way, must meet the 50′ set back, other lenders say we can do it as long as you have the letter from the township My buyers dont want to start over as they are set to close on the house they are selling in 2 weeks. How can one bank say something different from another while following FHA guidelines?” There are several unanswered questions to go along with this reader question–are the lenders interpreting local or state building code or | more...

April 27, 2015

FHA Loan Rules For Co-Borrowers: A Reader Question

By Joe Wallace

A reader asks, “In the case of two names on the deed (only one will be living in the home), are both incomes & debts considered for debt to income ratios?. Also is it required the mortgage co. listed on both of their Home owner Insurance?.” There are many issues that can affect the answer to this question. Are the two people married? Related by blood, marriage, or a family-type relationship? These are important issues that can affect how much the FHA is willing to guarantee on the loan and how much down payment is required. Also, state laws may affect how such a transaction is carried out, especially if the people buying the home are legally married. Community property states may have laws that govern how a lender is | more...

April 24, 2015

FHA Home Loans and Tax Lien Repayment Plans: A Reader Question

By Joe Wallace

A reader asks, “I have a payment plan on a tax lien from 2009 which I have been paying on time for a few years. Other than that, my credit is perfect. I am wondering if this would be okay for an FHA loan. I have records from IRS showing that this is being paid and can present them as well.” This is an important question. FHA loan rules do not permit borrowers who are delinquent on federal debts to apply for an FHA home loan until that delinquency has been addressed. But what about situations like the reader question, where there is no delinquency, but the federal debt still exists? FHA loan rules that govern the tax lien issue can be found in HUD 4155.1, Chapter Four, Section A. | more...