May 25, 2015
Today we pause our usual posts about FHA loans and related issues, in order to observe Memorial Day. We resume our regularly scheduled posts and answers to reader questions tomorrow. Thanks for reading and be sure to thank the veterans in your life for all the service and sacrifices made in the name of freedom. Thank you for reading and thanks to all veterans past and present who served.
May 23, 2015
A reader asks, “I closed an FHA loan on 02/18/15 and was charged a rate of 1.689% for Mortgage Insurance Premium. The rates were reduced in January-15. Was I charged an incorrect rate?” This is a common question for some borrowers because their loans happened during a period of time where the change from the old FHA MIP rates to the new rates occurred. The short answer to this reader question is, “It depends”. The timing of the assignment of a borrower’s FHA case number is key in cases like these. According to a Frequently Asked Questions page found at HUD.gov, the deciding factor on whether a borrower got the old rate or the new one is the date when the FHA case number was assigned. According to HUD.gov, “The | more...
May 22, 2015
A reader asks, “My bankruptcy was discharged in August of 2012. We did not reaffirm the mortgage either. One year later I short sales the house (August of 2013 it was sold). The short sale is not on my credit report nor are any missed payments. I was in the process of a mortgage modification when I filed bankruptcy. The firm that I used (which was later investigated by the FTC for mortgage fraud) promised they could take 100,000 off my loan (apparently some things are too good to be true). This under the advice of multiple lawyers I filed bankruptcy.” “I worked w a previous lender who put me threw du (or bu- the underwriting test used by fha). I passed that but he later took the approval back | more...
May 22, 2015
A reader asks, “I am the seller and was told by the buyers inspector that fha required that Federal Pacific Electrical stab lok was required to be replaced due to the potential that it Might Cause a safety issue. Any electrical can have a potential safety issue. My home was built in 1987.” While there isn’t a specific question here, the implied question seems to be, “Why was this correction required during the appraisal process?”. Any correction or repair that comes from the appraisal process could be required because A) the condition fails to meet FHA minimum property requirements or B) the condition fails to live up to state or local building code or C) there is another law or rule which must be satisfied. FHA loan appraisal guidelines are | more...
May 21, 2015
A reader asks, “We built a new home and within a few months started noticing moisture spots on our basement floor. After no action from the builder for 8 months, we have had to hire an attorney to make them start fixing it. It has been recommended that an interior peripheral drain (or a waterproofing system) be put in.” “The builder defect is our exterior drain was put in incorrectly so drainage water from rain and snow melt is ending up under our slab. I am very concerned about how this will effect resale someday. Have you seen an appraisal adjustment made on a home having this sort of system in place?” The problem with appraisal-related questions like this one is that conditions vary from market to market. What may | more...
May 21, 2015
A reader asks, “I closed a cash out refinance in December 2014. The term was a fifteen year at 4.75%. I received a flyer from my lender in February that offered a 3.25% rate. I decided to inquire about a thirty year term as circumstances had changed significantly after the first of the year with my wifes job. The lender sent me a GFE and we locked in the rate. After a short while I was told I had to pay for another appraisal and basically resubmit all of the paperwork that I had previously sent to the lender. As of three months later I still have no refinance and am out of pocket over $500.” “Is this legal to open two FHA cases within two months and why was | more...
May 20, 2015
Six days ago, mortgage loan interest rates caught a break, moving lower to end the week. But this week that small breather didn’t stop an upward trend that resumed once more–rates moved higher on Monday and Tuesday, with 30-year fixed rate conventional mortgages mixed–some lenders offered a best-execution rate as low as 3.875%, with more offering best execution rates at 4.0%, and a smaller number reported going up above 4.0%, best execution. FHA mortgage loan rates have found a comfort zone at 3.75% best execution. FHA rates may vary more among participating lenders than their conventional counterparts, so it’s good to shop around for the most competitive rates. When we use the phrase “best execution” we mean FHA lenders offering the rates mentioned here to extremely well qualified borrowers with | more...
May 20, 2015
The FHA/HUD official site has announced an important housing discrimination settlement between HUD and a housing authority in Pennsylvania. According to HUDNo. 15-055, “The U.S. Department of Housing and Urban Development (HUD) announced today a Conciliation Agreement with the Housing Authority of the City of Hazleton, Pennsylvania, settling allegations the housing authority discriminated against Hispanic households.” The agreement, the HUD press release states, resolves claims that the Hazleton, Pennsylvania housing authority, “violated the housing rights of Spanish-speaking applicants and tenants by requiring them to supply interpreters in order to communicate with housing authority staff and by denying them limited English proficiency services.” This, the press release states, is a violation of the Fair Housing Act. “When housing authorities accept HUD funding they are obligated to make their programs and services | more...
May 20, 2015
A reader asks, “When an applicant is applying for a refinance under the FHA Streamline and their spouse (co-borrower) has passed (died), does the remaining borrower need to show the six months of payment history before they can apply for a refinance without doing a credit qualification?” FHA loan rules for streamline refinance loans are found in HUD 4155.1 Chapter Six. Section C has a heading titled, “Seasoning Requirement For A Streamline Refinance” which addresses this reader question. It states: “On the date of FHA case number assignment, –the borrower must have made at least six payments on the FHA-insured mortgage being refinanced –at least six full months must have passed since the first payment due date of the refinanced mortgage, and –at least 210 days must have passed from | more...
May 19, 2015
A reader asks, “I am in the process of buying a home using a fha loan. The house that we are buying has a cracked foundation and the seller has already had it repaired and the repair has a lifetime transferable service and warranty. With it having had a repaired foundation will this pass the FHA minimum property standards? We have an appraisal in about a week and I am terrified its going to kill the deal.” Unfortunately it’s impossible to say whether a foundation repair job would bring the foundation up to minimum property requirements or state/local building code. Without inspecting the foundation, giving such a determination would be iffy at best. The important thing to remember is situations like these is that FHA loan standards aren’t the only | more...