Articles Published in: September 2015

September 24, 2015

FHA Loan Income Requirements: A Commission Question

We recently got a question regarding commission income and how it may be reviewed by the lender. More specifically, the question is about whether the nature of the reader’s income is truly “commission income” and how the lender might view that on the FHA loan application. The reader asks: “On my pay stub next to earnings it says commission, but this actually isnt true commission pay. We arent selling anything, we deliver to stores. Its just how my company decided to pay us. So my question is do I fall under this category of commission based salary, where I would need a year of income or would that not matter in my case?” Unfortunately, the answer to this question would come from the lender. The loan officer’s job is to | more...

September 24, 2015

Mortgage Rate Trends: Holding Steady

By Joe Wallace

Wednesday saw mortgage loan rates holding steady, more or less, following some improvement from the previous day. There was some weakness in bond markets that affect mortgage loan interest rates, but in spite of that Wednesday is what many in the business call a “sideways” day. 30-year fixed rate conventional mortgages held steady, best execution at between 3.75% and 4.0%. According to our sources only a small number of lenders may have offered the very bottom end of that range, with 3.875% more typical in a best execution scenario. FHA mortgage loan rates hold fast at 3.75% and as always, that best execution rate may vary more among participating FHA lenders. Best execution rates assume ideal conditions–borrowers with outstanding financial qualifications may have access to rates at or near these | more...

September 23, 2015

HUD 4000.1 And Changes To The FHA Streamlined 203(k) Rehab Loan

By Joe Wallace

Since the FHA and HUD published the new Single Family home loan policy handbook, HUD 4000.1, we’ve been examining changes and updates to FHA loan rules. One such update affects the FHA 203(k) Streamline Loan, sometimes called and FHA streamline rehab loan. According to the FHA official site, the changes are not being reported in a mortgagee letter or other official FHA/HUD document, because lenders are being asked to review the program policies in their entirety. That said, FHA/HUD did publish a brief list of updates with a few basic details. “FHA is not publishing a detailed document of specific changes to the 203(k) product section,” the official site states, “as it is important that mortgagees and 203(k) consultants read the section in its entirety to understand the policy within | more...

September 23, 2015

HUD 4000.1 Questions: Occupancy

By Bruce Reichstein

With the publication of the new FHA Single Family Home Loan guidebook, HUD 4000.1, there have been some changes, updates, revisions and restatements of existing FHA loan policy. We’re examining the new rule book over time to discover what borrowers and lenders alike may need to know about FHA home loans under the new handbook. Occupancy is an important question/issue connected with FHA home loans. HUD 4000.1 states that there is a definite occupancy requirement for new purchase single-family home loans: “At least one borrower must occupy the property as their principal residence within 60 Days of signing the security instrument and intend to continue occupancy for at least one year.” There is also a requirement on non-occupying co-borrowers–they don’t have to live in the home but must meet the | more...

September 22, 2015

FHA Loans And Federal Debt

By Joe Wallace

Here is a common type of question about applying for an FHA mortgage loan when you have owe a debt to the federal government: “Can anyone tell me what the guideline for FHA loans regarding payment plan with IRS when you do not own property and you owe taxes? ” FHA loan rules here are basically concerned with giving lenders a yardstick to measure a borrower’s creditworthiness with regard to federal debt–and that means that a lender is responsible for insuring the borrower is not delinquent on the payments of that debt. Borrowers who are delinquent and are shown to be delinquent through the lender’s due diligence are not eligible for an FHA mortgage loan until such time as they have corrected the delinquency to the satisfaction of the government. | more...

September 22, 2015

Mortgage Loan Interest Rate Trends: Higher On Monday

By Joe Wallace

You might have noticed more of these types of posts recently–we’ve expanded our coverage of FHA mortgage loan interest rate trends because of the attention to last Thursday’s Fed announcements on the future of interest rates and the potential for volatility in the markets that directly affect those rates as a result. Things seem to be settling back down to normal and our coverage on mortgage loan rate trends will do likewise, but Monday was significant because it was the first day rates moved higher following the Fed’s Thursday announcement that no rate hike was coming, at least for now. 30-year fixed rate conventional mortgage loan interest rates are still in a range between 3.875% and 4.0% best execution at the time of this writing. It was hoped that another | more...

September 21, 2015

FHA Loan Appraisal Questions

By Joe Wallace

There are many readers who ask us appraisal-related questions in the comments section here; some are general questions, while others get quite specific. Here’s an example of one of the more specific FHA appraisal questions we’ve been asked recently: “If a bedroom has two windows with keyed burglar bars do both have to be replaced with quick release burglar bars?”. The FHA has recently issued HUD 4000.1, which is a comprehensive policy guidebook for FHA single family loans including references to FHA appraisal standards. Those references do include a mention of bars on windows: “The Appraiser must report when the Property has security bars on bedroom windows or doors.” Note that this reference says nothing about replacement or removal, however state or local building code might. So what all borrowers | more...

September 21, 2015

FHA Mortgage Rate Trends: Lower On Friday

By Joe Wallace

FHA mortgage rates continued a move lower on Friday–a move that started on Thursday following the Fed announcement stating that there would not be a hike in interest rates for now. The Friday momentum–if it carries into Monday–could result in rates dropping to a best execution 3.75% best execution for 30-year fixed rate conventional mortgages. That would also likely mean a drop in the FHA best execution rates, too. Those rates have held out in their best execution comfort zone of 3.75% up to now, so we’ll be watching what rates do and where they stand at the end of the business day. Industry professionals last week were advising borrowers to consider locking in a mortgage loan interest rate prior to Thursday’s Fed announcement, but now the advice is taking | more...

September 19, 2015

All About HUD 4000.1, The New Single Family Policy Handbook

By Joe Wallace

In the weeks leading up to the launch of the new FHA Single Family Home Loan policy handbook, HUD 4000.1, we’ve discussed some of the contents of the handbook in detail, but some may wonder what exactly HUD 4000.1 is and how it affects them. HUD 4000.1 consolidates and updates FHA loan policy for single-family into a single reference. It supersedes many prior FHA loan mortgagee letters, which are issued occasionally by the FHA/HUD to announce, revise, or clarify FHA loan policy. According to the FHA official site, HUD 4000.1, “The Federal Housing Administrations (FHA) Single Family Housing Policy Handbook (SF Handbook; HUD Handbook 4000.1) is a consolidated, consistent, and comprehensive source of FHA Single Family Housing policy.” What does that mean? According to the FHA/HUD, the new handbook has | more...

September 18, 2015

HUD Announces 2015 Relief For Victims Of Hurricane Sandy

By Joe Wallace

You read that correctly–the Department of Housing and Urban Development has announced further relief for victims of Hurricane Sandy. It’s been quite some time since we ran any Sandy-related news, but a recent decision by HUD gives these home owners some much-needed assistance. Many FHA borrowers were affected by that hurricane, and according to a press release issued by the FHA/HUD official site, “The U.S. Department of Housing and Urban Development today decided that HUD will not force thousands of New York and New Jersey homeowners to repay federal disaster recovery funds following a decision by the Federal Emergency Management Agency (FEMA) to increase flood insurance claim payments to families it initially underpaid following Hurricane Sandy.” According to HUDNo.15-144, federal law gives the Department of Housing and Urban Development the | more...