Articles Published in: July 2015

July 20, 2015

FHA Loans, Seller Concessions, and Cash To The Borrower

We recently got a question about an FHA loan situation where the seller of the home agreed to pay 3.5% of the closing costs on a transaction. According to the reader question, the “actual permitted seller concessions” were much lower. The reader asked, “Since FHA would not allow cash back”, the buyer asked the seller for the difference of the two amounts to be paid to the borrower, “outside of closing” The question the reader asks: Is this legal? FHA loans do not permit cash back to the borrower except in the form of refunds. However, HUD 4155.2 does include some guidelines for seller concessions, which are limited to six percent of the sales price. Those guidelines do permit “monetary gifts” as we’ll read in a moment. Chapter Four of | more...

July 18, 2015

FHA Mortgage Rate Trends: Small Recoveries

By Joe Wallace

Mortgage loan interest rates have been rising and falling in a volatile market; a combination of economic factors at home and headlines from overseas referring to the Greek crisis and China stock market woes have made for some unpredictable times where the rates are concerned. Some market watchers believe that we’ve seen the highest point rates might go to in the short term and that some kind of leveling off period is due. But only time will tell; for now rates have been making very small improvements that are approaching the lowest levels for the entire month. 30-year fixed rate conventional loans have moved out of a best execution range with 4.25% at the upper end. 4.125% is now the most common best execution rate according to our sources. FHA | more...

July 17, 2015

HUD Charges South Dakota Property Owners With Discrimination

By Joe Wallace

A press release on the FHA/HUD official site announces discrimination charges against the owners of a housing complex in South Dakota. According to HUDNo.15-091, the owners violated the Fair Housing Act by, “initially refusing to allow a resident with disabilities to have an emotional support animal. HUDs charge alleges that even after the resident obtained a support dog, the owners, Robert Christensen, Linda Christensen, and Viking Villas, LLC, placed overly burdensome requirements on the residents use of the dog.” At first glance this case may seem to have nothing to do with FHA home loans, FHA refinance loans or related issues. But for borrowers who want to purchase condo units with FHA loans, or for those who purchase a home in a community with a homeowner’s association, issues like these | more...

July 17, 2015

House Hunting And Your FHA Home Loan

By Joe Wallace

There are many things you can do before and during your house hunting process to make buying your new home much easier. Do you know what home buyer resources are available in your state? Have you compared lenders both online and at the branch? Are you considering FHA loan pre-approval? Getting pre-approved is a very good step. It helps you establish a relationship with a participating FHA lender, and gives you a much better idea of what kind of price range and other factors you might need to consider when house hunting. Pre-approval forms will ask you those difficult questions–“How much do you want to spend on your home?” and “What size home do you need?” The pre approval question also forces many borrowers to think about their house needs | more...

July 16, 2015

FHA Loans And Federal Law

By Joe Wallace

We’ve been discussing FHA loans, the Fair Housing act, and other federal laws lately. There have been many changes to applicable federal law in recent times that can and do directly affect the mortgage lending process. It’s no surprise that the FHA single family home loan program, being created by the federal government, would lead the way in pro-consumer regulatory changes and set the example when it comes to requiring equal treatment for all qualified borrowers. But some of the most important federal laws and regulations aren’t brand new–they’ve been around for quite some time. Some have been further modified to make them more inclusive. The Fair Housing Act now includes language that protects people regardless of their gender identity, family status, sexual orientation and much more. FHA loan rules | more...

July 16, 2015

FHA Loans And The Equal Credit Opportunity Act

By Joe Wallace

From time to time, we get reader questions asking whether certain types of income such as public assistance, alimony, or other types of payments might count for or against a borrower trying to apply for an FHA home loan. These are logical concerns; how many potential FHA borrowers might shy away from applying because they mistakenly believe that certain types of income such as public aid might actually count against them when it comes to loan approval? The rules that govern these issues are found in HUD 4155.2 Chapter One under a heading that discusses federal law known as the Equal Credit Opportunity Act or ECOA. Did you know that ECOA rules prohibit a lender from denying credit to a borrower simply because he or she receives public assistance? Chapter | more...

July 15, 2015

FHA Mortgage Loan Interest Rate Trends: Slightly Lower After Fed Testimony

By Joe Wallace

On Wednesday, mortgage loan rates improved slightly after semi-annual testimony by the Fed Chair was delivered to Congress. Rates didn’t improve all that much, but with 30-year fixed rate conventional mortgage loans, we’re seeing reports of more lenders offering best execution rates closer to the bottom of the four percent range than yesterday. FHA mortgage loan rates seem to have found a comfort zone, with best execution rates between 3.75% and 4.0% reported for many days now. Remember, your experience may vary–best execution rates are offered to borrowers with ideal credit scenarios. The rates you see reported here are not available to all borrowers or from all lenders. The availability of a participating FHA lender offering these rates or something similar may also be a factor FHA mortgage loan rates | more...

July 15, 2015

FHA Home Loans And “Zombie Debt”

By Joe Wallace

Some borrowers who are preparing for an FHA loan application get surprises when they pull their credit reports–the existence of outdated debt information, inaccuracies, and mis-reported collection activity can plague credit reports in some cases. It takes time to undo these things and the borrower must work directly with the credit reporting agency to clear up the problem. And according to a recent headline at the Consumer Financial Protection Bureau (CFPB) official site, there may be more of these issues in store for some potential FHA loan applicants. According to Were ordering JP Morgan Chase to refund $50 million and stop collecting on 528,000 accounts, JP Morgan Chase’s sale of credit card accounts to debt buyers resulted in inaccuracies that brought complaints of aggressive, improper, and inaccurate debt collection activity. | more...

July 15, 2015

FHA Home Loans And Divorce

By Joe Wallace

We get plenty of reader questions about the practicality or feasibility of putting a home loan in one borrower’s name as part of divorce proceedings. Borrowers who purchased a home together with an FHA loan who later get divorced may or may not be at odds regarding who is to take responsibility for the home, the mortgage, and related financial obligations. We’re often asked if it’s possible to refinance so that one borrower or the other can take sole possession of the property and the mortgage. But divorce proceedings–and divorce law–often varies from state to state, so it’s impossible to answer such questions in a general way. Community property laws may dictate how such things must be carried out, and not all states have community property laws. So what can | more...

When Is An FHA Loan Better Than A Conventional Loan?

July 14, 2015

FHA Refinance Loans: With Appraisal Or Without Appraisal?

By Joe Wallace

For borrowers examining their refinance loan options, it’s important to know what kind of refinance loan you want so you can plan ahead for expenses that might be related to the loan such as appraisals and up-front closing costs. Some borrowers assume that certain types of refinancing never require an appraisal, but this is not true–FHA loan rules for Streamline Refinancing, for example, say that no appraisal is required by the FHA but the lender may ask for one regardless. This surprises some applicants, and we get a fair number of inquiries asking if certain lender policies (including “appraisal required” streamline loans) are legitimate. “My understanding is that the FHA rules don’t require an appraisal for this refinance loan. My lender says I will need one for my streamline refinance | more...