Articles Published in: 2015

September 26, 2015

FHA Loan Rules In HUD 4000.1 And Past Mortgagee Letters From FHA/HUD

When the new FHA single-family home loan policy hand book (HUD 4000.1) took effect, it became the official go-to reference for FHA single family new purchase loans and refinance loans. That means that the old FHA loan rule books for single family transactions, including HUD 4155.1 and HUD 4155.2, became inactive as of the launch date for HUD 4000.1. It also means that a large amount of previous FHA/HUD correspondence also became inactive. The FHA/HUD official site has an archive of all FHA mortgagee letters (ML for short, which feature policy changes, updates, modifications, etc.) but there are many of those that are now inactive, superseded by HUD 40001. There is no way to list all the mortgagee letters, handbooks, and other items that have been made inactive, but the | more...

September 25, 2015

HUD 4000.1 Questions: FHA Loans For Homes In Flood Zones, Flood Insurance

By Joe Wallace

With the publication of HUD 4000.1, the new Single Family Home Loan handbook, there have been plenty of changes, alterations, restatements of policy and other issues borrowers and lenders alike should be aware of. We’re examining some of the most frequently asked questions about policies found in HUD 4000.1 to help borrowers and lenders know what current policy, as found in the new handbook, is on specific issues. One of those issues has to do with flood insurance and flood zone determination. FHA loan rules have standards for new construction and existing construction homes; let’s examine what the rules in HUD 4000.1 say about flood insurance for existing construction. According to the FHA official site, rules for flood insurance include the following requirement of the lender: “The lender must determine | more...

Can I buy a manufactured home with an FHA loan?

September 25, 2015

FHA Loan Applications and Repayment Issues

By Joe Wallace

We get many questions from readers about FHA loans in our comments section. Some of those questions refer to specific credit issues such as the one that came in recently asking: “My loan is currently processing. There is a problem with being 30 days late on my rent last year. Will this totally effect my changes of being approved???” The answer to this question isn’t as simple as quoting a passage from the new FHA loan rulebook, HUD 4000.1. The answer depends greatly on the borrower’s other financial qualifications. FHA loan rules state that a one-time lapse is not necessarily enough to dismiss the applicant as a bad credit risk. The lender will be looking for patterns that indicate whether the borrower has a reliable payment history on financial obligations. | more...

September 24, 2015

FHA Refinance Loan Rules: HUD 4000.1

By Joe Wallace

The FHA Single Family Home Loan policy handbook, HUD 4000.1, contains a variety of changes, updates and other alterations to FHA loan policy. In many cases, FHA loan rules for new purchase loans and refinance loans may have stayed the same, in other cases there are slight (or more substantial) revisions to FHA policy. One set of frequently asked questions about this new handbook and revised policy centers around FHA refinance loans. For example, one section of the new handbook that governs refinance loan transactions discusses what policy FHA has when the borrower’s name is on the title of the property but not listed on the mortgage secured by that property. Does the borrower qualify for an FHA refinance loan in such cases? According to a Frequently Asked Questions list | more...

September 24, 2015

FHA Loan Income Requirements: A Commission Question

By Joe Wallace

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...