Articles Published in: May 2015

May 30, 2015

Common Myths About FHA Home Loans

FHA loan myths are hard to dispel–no matter how many times you try to set the record straight, there will always be people who simply don’t know the truth about FHA loans and how they can help the typical house hunter. For example, some people mistakenly believe that FHA loans are only for the economically disadvantaged. Others believe something similar along these lines–that it is possible to “earn too much” to qualify for an FHA mortgage. These things are not true. Another myth about FHA home loans is that a borrower’s eligibility is solely dependent on what the FHA loan rules say about FICO scores, credit history, etc. But this is also not the reality behind the FHA home loan process. For example, FHA mortgages do have a minimum FICO | more...

May 29, 2015

FHA Mortgage Loan Interest Rate Trends: Slightly Better

By Joe Wallace

Since the three-day weekend that made this a short trading week, the overall trend in mortgage loan interest rates at the time of this writing has been “hold steady” or slightly lower–but not much. The month of May has seen basically what amounts to a new and higher range in mortgage loan rates overall–though still loan in comparison to previous years–and we’re seeing 30-year fixed rate conventional mortgage rates hovering at or near the 4.0% mark, best execution. Friday’s trends brought the 30-year fixed conventional mortgage loan rates in some best execution instances below 4.0%. Remember, “best execution” means rates offered extremely well-qualified borrowers. Your experience with these rates may vary. FHA mortgage rates have found a comfort zone of 3.75%, not as good as the previously held 3.5% (or | more...

May 29, 2015

Texas Flooding, FEMA, and FHA Disaster Relief Options

By Joe Wallace

With headlines about Texas flooding, FHA borrowers there and in other areas in danger of being affected by natural disasters this spring may wonder what options are open to them in the wake of a flood, a hurricane, tornado or other weather event. The FHA and HUD do have options for qualified borrowers affected by a natural disaster. At the FHA/HUD official site, you’ll find the following: “Was your home or your ability to make your mortgage payments harmed by an event that the President declared a disaster? You may qualify for relief to help you keep your home. Much of the mortgage industry and The United States Department of Housing and Urban Development are committed to assisting borrowers whose lives and livelihoods are thrown into turmoil by a disaster. | more...

May 29, 2015

FHA HECM Loans With Set-Aside Accounts For Property Taxes

By Joe Wallace

The FHA and HUD have been making a number of revisions to the FHA Home Equity Conversion Mortgage program (FHA HECM) including changing the nature of payouts based on the type of HECM loan (adjustable rate or fixed rate) and many other alterations. One of the most recent changes is how the FHA expects participating lenders to deal with unpaid property taxes on an FHA HECM, which technically can result in the loan being declared due and payable. Some lenders and borrowers go into a HECM loan with an arrangement to have a set-aside account created specifically for the purpose of paying property taxes to avoid problems later down the line. But what happens if a HECM borrower lets that set-aside account lapse? When the property taxes begin to go | more...

May 28, 2015

FHA Loan Pre-Approval and Credit Scores

By Joe Wallace

One question that comes up frequently when talking FHA loans involves whether or not a borrower’s credit scores are affected by applying for pre-approval for an FHA mortgage loan. While we aren’t experts in credit reporting, and the FHA loan rules found in HUD 4155.1 do not address this issue, a bit of research into this issue turns up some interesting facts. According to the Kiplinger Magazine’s, “Could Mortgage Preapproval Hurt Our Credit?”, any kind of loan application has the potential to “ding” your credit rating. That, Kiplinger reports, is according to Barry Paperno, consumer operations manager for Fair Isaac (the company that created the FICO score system). “Typically, you would see a drop of five points or less,” says Paperno in the Kiplinger piece, which adds, “…when lenders request | more...

May 28, 2015

HUD Announces Historic “Redlining” Settlement

By Joe Wallace

Redlining, the act of discriminating against a group of people in the mortgage loan servicing process, is prohibited by the Fair Housing Act. Redlining often goes undetected as long as those being discriminated against don’t file a complaint with the government. When such complaints are reported to the FHA and HUD, they are taken seriously and investigated to insure violations of the Fair Housing Act don’t continue. This week HUD announced a historic settlement in a redlining case in HUDNo.15-064. “The U.S. Department of Housing and Urban Development (HUD) today announced an agreement with Associated Bank, N.A. (Associated) to resolve a disparate treatment redlining case, one of the largest redlining complaints brought by the federal government against a mortgage lender. At approximately $200 million, it is the largest settlement of | more...

May 27, 2015

Shopping Around For An FHA Loan

By Joe Wallace

One thing that’s important for house hunters to do when looking for a home? Comparison shop. But that’s not just a good idea when it comes to measuring the price tag on a home; it’s also a very good idea to shop around for a lender in the same way you do looking for just the right home to buy with an FHA loan. A recent blog post on the HUD official site via The HUDdle discusses recent housing trends and developments in the home loan industry. One thing writer Ted Tozer notes, is that there has been a set of important developments in the industry as some major financial institutions dial back their participating in the mortgage lending market. Tozer writes, “As major banks have reduced their participation in | more...

May 27, 2015

FHA HECM Loan Rules: When Can A HECM Loan Be Declared Due In Full?

By Joe Wallace

There have been many changes to the FHA HECM (Home Equity Conversion Mortgage) program in recent months. If you are a qualified HECM loan applicant exploring your options now after having researched them a year or two ago, it’s likely you will need to re-familiarize yourself with the FHA HECM rules and regulations as many have had important changes made. HECM loans still feature the usual conditions–failing to use the home as the primary residence, for example, can still result in the HECM loan being declared due in full. That hasn’t changed, but some other conditions that trigger a due-in-full demand have. One such change involves when a HECM loan can be declared due in full because of failure to meet HECM loan “property charge” requirements. Did you know that | more...

May 26, 2015

The 2009 First Time Homebuyer Tax Credit: A Reader Question

By Joe Wallace

A reader asks, “Is the tax credit still available to 1st time new home buyers? If not, are there any other credits available that can help new home buyers? Will I be considered a new home buyer if I purchased a home just over 5 (2010) years and attempt to purchase a new one in 2015?” We can’t give out tax advice, as we aren’t tax professionals, so it would be necessary to contact the IRS directly to learn about any homebuyer-related tax credits that might be available for a given tax year. Tax law changes quite frequently and what was legal last year may not be allowed this year due to legislation, expiration of government programs, or other changes. That said, we can report that it appears that, based | more...

May 26, 2015

FHA Loan Rules For Short Sales: A Reader Question

By Joe Wallace

A reader asks, “I filed a chapter 7 in 2009 and listed my home in the bankruptcy as it tuned out I tried to short sale but the bank told me no. so I filed and it discharged in 2009. The bank did nothing for 7 years. I moved out of the home in 2009 and it remained empty for 7 years. I purchased another home (hard money loan) in 2012. I improved my credit rating and I want to refi my home. The bank finally let me short sale the home in 2014 it sold. What is going on the lenders are telling me that there going by the short sale date not the bk date. Can you help?” There are two issues at work in these situations–FHA loan | more...