Articles Published in: December 2015

December 15, 2015

FHA Loan Rules Versus Lender Standards

A reader got in touch to ask about certain FHA loan standards for loan approval. “…underwriting is telling me that I am approved with conditions. One of which is, no missed or over 30 days late payment. I cannot give that. They say it is a law/rule. Is this true in my case?” We get many “is this true?” type questions. Unfortunately there’s no quick or easy answer to this because there are several factors at work. A borrower who comes to the FHA loan process with missed or late payments in the 12 months leading up to the application will find it more difficult to get an FHA home loan approved. We’re not saying that’s the case with this particular reader, but it’s worth pointing out that the lender | more...

December 15, 2015

Mortgage Rate Trends: Higher Ahead Of Fed

By Joe Wallace

With a great deal of anticipation on Wednesday’s Fed meeting, it’s no surprise that there’s some volatility in mortgage rates this week–Monday saw rates creeping higher ahead of the Fed; there is much speculation about the potential for the first interest rate hike by the Fed since 2006. Whether or not that happens remains to be seen, but in the meantime investor behavior in the days leading up to the Fed meeting creates days like this. And that means that at the time of this writing, 30-year fixed rate conventional mortgages were, best execution-wise, running between 4.0% and 4.125% depending on the lender. Our sources report that some lenders are still aggressively offering rates below the 4.0% range to the best qualified borrowers, but experience may vary depending on a | more...

December 14, 2015

HUD 4000.1 On Appraisal Expiration Dates

By Joe Wallace

Ever since the FHA and HUD published the new FHA single-family mortgage loan rule book, HUD 4000.1, we’ve been examining important sections of the rules to see what current FHA mortgage loan policy is; FHA and HUD announced there would be no comparison document outlining the myriad of changes from the old guidelines to new and that it was the reader’s responsibility to learn what current policy might be for any given FHA loan topic. With that in mind we started reviewing HUD 4000.1 and discussing important issues. One such issue is the FHA’s rules on appraisal expiration dates. FHA appraisals are generally valid for 120 days, but the rules in HUD 4000.1 add: “The 120 Day validity period for an appraisal (see Ordering Appraisals) may be extended for 30 | more...

December 14, 2015

FHA HECM Loan Limits For 2016

By Joe Wallace

The FHA has published the new mortgage loan guaranty limits for FHA Home Equity Conversion Mortgages for 2016. According to FHA Mortgagee Letter 2015-29, the new limits take effect for all FHA HECM loans with FHA case numbers assigned on or after 1 January 2016. According to the Mortgagee Letter, the 2016 limits are as follows: “For the period January 1, 2016 through December 31, 2016, the maximum claim amount for FHA-insured HECMs will remain $625,500 (150 percent of Federal Home Loan Mortgage Corporations (Freddie Mac) national conforming limit of $417,000). This maximum claim amount of $625,500 is also applicable to Freddie Macs special exception areas: Alaska, Hawaii, Guam, and the Virgin Islands.” FHA publishes new loan guaranty limits every year, making adjustments where necessary for housing market changes and | more...

December 11, 2015

Mortgage Rate Trends: Higher Ahead Of Retail Sales Report, Then Lower On Friday

By Joe Wallace

Thursday saw mortgage loan interest rates move higher ahead of this week’s much-anticipated retail sales report. On Thursday we saw 30-year fixed rate conventional mortgage loans move higher (4.0% best execution depending on the lender), though borrowers may notice the increase in closing costs instead of an actual higher number from the day before. The FHA mortgage loan rates stayed (best execution) in the 3.75% comfort zone, but those who shop around for a lender will notice more variation in FHA mortgage loan rates than with conventional equivalents. And then there was Friday–a day where the Retail Sales report could have been a spoiler for rates depending on the report and investor reaction to it. But at the end of the day, rates moved lower, putting 30-year fixed rate conventional | more...

December 11, 2015

FHA Announces New Loan Limits For 2016

By Joe Wallace

An FHA press release announces 2016 FHA mortgage loan guaranty limits for mortgage loans with FHA loan case numbers assigned on or after January 1, 2016. Housing market changes in 2015 brought increases in the maximum loan guaranty limit in many counties–188 areas will see new, higher limits according to the press release. According to the FHA official site, “Each year, FHA recalculates its loan limits based on 115 % of the median house price in the area. For counties, or equivalent, located in Metropolitan Statistical Areas (MSAs) the limit for all areas in the MSA is calculated based on the highest cost county.” The press release says there has been no alteration to the FHA national loan limit ceiling which, according to the press release, “remains at $625,500”. The | more...

December 10, 2015

FHA Appraisals and Air Conditioning Units

By Joe Wallace

A reader got in touch with us recently to ask whether a home with window-mounted air conditioning units could pass an FHA appraisal. Unfortunately the answer to this question isn’t as simple as a yes or no–there are several factors involved that may determine how an FHA appraiser views such units. The first and most obvious would be the condition of the units themselves. FHA appraisal rules require all mechanical systems in the home to be in good working order or be brought into compliance with that requirement through repair or replacement. The appraiser’s job would be to determine whether or not the general state of the window units–where permitted–is acceptable. But there are a few other unanswered questions–do these window units act as a replacement for a faulty or | more...

December 10, 2015

FHA Loans and Divorce/Separation

By Joe Wallace

We get many questions about how an FHA home loan transaction might be affected by divorce. One of the latest involves a situation where the potential FHA loan applicant wants to apply during a divorce proceeding: “I am currently in the process of legally separating/divorcing my husband. Once granted in court, I plan to apply for an FHA first home buyer loan to find a home for myself and our infant son. From what I am reading online, FHA may still require my husband to do a credit check, etc. However, my question is, if he and I are legally separated in the interim of divorce proceedings and live apart, will his income still be included in the total household limitations? On my own I qualify for both an FHA | more...

December 9, 2015

HUD 4000.1 On Waiting Times For New Loan Applications Post-Chapter 7 Bankruptcy

By Joe Wallace

In our last blog post we discussed the rules found in HUD 4000.1 about waiting times for borrowers who want to purchase a home with an FHA mortgage after a Chapter 13 bankruptcy. The FHA single family home loan rule book also has instructions for lenders and borrowers about mandatory waiting times and other requirements for those seeking a home after a Chapter 7 bankruptcy. Borrowers with a Chapter 7 may not automatically be barred from another home loan, but FHA mortgage loan rules do require certain things of the lender and the borrower. From HUD 4000.1: “A Chapter 7 bankruptcy (liquidation) does not disqualify a Borrower from obtaining an FHA-insured Mortgage if, at the time of case number assignment, at least two years have elapsed since the date of | more...

December 9, 2015

HUD 4000.1 On Post-Chapter 13 Bankruptcy Waiting Times For A New FHA Loan

By Joe Wallace

The recently-published rulebook for FHA single family mortgages, HUD 4000.1, contains new rules and guidelines for participating lenders, plus rules that have been updated, clarified, or restated from the previous editions of the rules. One important area of the new rule book pertains to potential FHA loan applicants who want to apply for a new loan following a Chapter 13 bankruptcy. We get many comments and questions each month involving scenarios where a borrower wants to apply for a new home loan following a bankruptcy. Since the publication of the new rules, what does the FHA/HUD have to say about filing for a new mortgage following a Chapter 13? From HUD 4000.1: “A Chapter 13 bankruptcy does not disqualify a Borrower from obtaining an FHA- insured Mortgage, if at the | more...