Articles Published in: 2015

August 11, 2015

HUD Mortgage Board Takes Action Against Two Lenders

A press release on the FHA/HUD official site announces HUD action against two Texas-based lenders. HUDNo.15-102, published Monday August 10, 2015, states: “The U.S. Department of Housing and Urban Developments Mortgagee Review Board (MRB) today announced settlement agreements with two Texas mortgage lenders following allegations they engaged in a scheme to charge bogus fees to consumers, which improperly inflated mortgages for borrowers purchasing newly constructed manufactured housing.” 11 violations of FHA lending rules were alleged in the case. According to the press release, the HUD Mortgage Review Board claims, “American Home Free Mortgage, LLC (AHFM) of Prosper, Texas, artificially increased mortgage costs by an average of $12,000 per loan through illegitimate fees paid to a company owned and operated by its sales manager. In addition, HUD alleged that there were | more...

What you should know about FHA 203(h) Loans For Disaster Victims

August 10, 2015

FHA Loan Maximum LTV Amounts

By Bruce Reichstein

In our last blog post we discussed some of the basics about FHA loans, loan-to-value limits, and how certain circumstances might affect the maximum LTV on an FHA mortgage. Normally FHA single-family home loans for new purchases have a maximum LTV of 96.5%, requiring the borrower to make a 3.5% down payment. But FHA loans can have different LTV percentages if certain conditions apply. Homes that are purchased with non-occupying co-borrowers, for example, may require a higher down payment. According to HUD 4155.1 Chapter Two Section B, “A non-occupying borrower transaction involves two or more borrowers where one or more of the borrower(s) will not occupy the property as his/her primary residence. When there are two or more borrowers, but one or more will not occupy the property as his/her | more...

August 10, 2015

What Affects My FHA Home Loan Amount and Down Payment?

By Joe Wallace

FHA home loans offer a potential maximum financing of 96.5%, with a required minimum down payment (also known as a minimum investment) of 3.5%. But not all borrowers are eligible for the maximum financing amount. Some borrowers may be required to put more money down depending on circumstances. What are these circumstances? The most obvious one hinges on a borrower’s credit history and FICO score. Borrowers who have “marginal” FICO scores or who don’t otherwise meet the lender’s minimum standards for the loan may be required to put more down as a “compensating factor”. But credit isn’t the only thing that can affect the FHA loan’s maximum financing amount on a given transaction. HUD 4155.1 Chapter Two Section B has the guidelines for calculating the maximum financing amount permitted in | more...

August 8, 2015

FHA Mortgage Loan Interest Rate Trends: Back And Forth

By Joe Wallace

Mortgage loan rates had a tug-of-war this week. On Monday rates pushed back into the high three percent range (best execution) for 30-year fixed rate conventional mortgages, but after that rates moved higher due to comments from the Fed on interest rates, and kept moving higher the next day as scheduled jobs data release time approached. But once that jobs report came out, there was already one day of recovery, and Friday saw reports of a rally by day’s end, not higher numbers–the final count for the week was three days of improvement against two days in a row for some upward movement. But we’re still seeing rates hovering at or near the high three percent zone. 30-year fixed rate conventional mortgage loans are, best execution, sometimes dipping back into | more...

August 7, 2015

FHA Refinance Loan Options

By Joe Wallace

If you are considering a refinance loan, there are many options under the FHA single-family home loan refinance program. You can refinance from a conventional or non-FHA mortgage into an FHA loan, get out of a variable or adjustable rate mortgage into a fixed rate loan, and even refinance with added funds for approved energy-efficient features or upgrades. FHA home loans allow non-FHA borrowers to refinance using cash-out or no-cash-out refinancing. These types of refinance loans require a new appraisal and credit check. Borrowers should know that even if it’s only been a short amount of time since loan closing, any appraisal used on a home where the loan has closed cannot be re-used for the purpose of a new loan. Borrowers who want to refinance early should expect to | more...

August 7, 2015

FHA Loan Fees Which Are Not Considered Closing Costs

By Joe Wallace

There are a variety of fees and expenses associated with FHA home loans; typical costs that the borrower should be saving up for during the planning stages of a new home loan. The FHA requires a minimum 3.5% down payment, for example, and that down payment is considered separate from the borrower’s closing costs. And then there are expenses which are not considered part of the down payment OR closing costs. The FHA loan rules found in HUD 4155.2 at the time of this writing explain these costs. Discount points (a prepaid amount designed to lower the interest interest rate) are included in such expenses–not a down payment, not a closing cost. Chapter Six of HUD 4155.2 describes discount points as follows: “Discount points charged by the lender on a | more...

August 6, 2015

FHA Loans And Derogatory Credit Information

By Joe Wallace

Many borrowers want to know what might be considered a problem when it comes to the lender’s review of credit histories and FICO scores. Lender standards apply in all such situations, so FHA minimums aren’t the only requirements to be concerned with, but in general there are some credit issues that could require the lender to process your loan paperwork “by hand” or take a closer look at your financial qualification data. What are these issues? According to the FHA/HUD official site, delinquency is an important factor: –Bankruptcy, foreclosure, collection account, charge-off, tax lien, or judgment; –Any mortgage trade line including mortgage line-of-credit payments, during the most recent 12 months, consisting of: –3 or more late payments of greater than 30 days, or –1 or more late payments of 60 | more...

August 6, 2015

Participating FHA Lenders: Direct Endorsement Versus Conditional Approval Authority

By Joe Wallace

There are two types of participating FHA lenders. One has “automatic authority” or “direct endoresement” (DE) authority to approve your FHA loan application in most cases, and the other has “conditional approval” authority which requires the lender to submit your FHA loan paperwork to the FHA for final review before the loan can be closed. FHA loan rules for these two different types. Found in HUD 4155.2 Chapter One Section A, we learn the following: “Under FHAs Direct Endorsement (DE) program, approved lenders may underwrite and close mortgage loans without FHAs prior review or approval. This includes all aspects of the mortgage loan application, property analysis, and borrower underwriting.” Chapter One includes a note, adding: “This assumes that the lender is a DE lender with unconditional approval. If the lender | more...

August 5, 2015

FHA Mortgage Rate Trends: Higher After Fed Talk Of Rate Hike

By Joe Wallace

Mortgage loan interest rates have been recovering, but on Tuesday the Fed’s discussion of a possible September interest rate hike caused a reaction that brought rates higher. 30-year fixed rate conventional mortgage loan interest rates, best execution, moved back to 4.0% after a brief flirtation with the high three percent range, though some lenders may still be offering sub 4% rates to the most qualified applicants. At the time of this writing, FHA best execution rates are still at 3.75% which is a change from the previously held range of rates with 4.0% at the upper end. Remember, best execution means rates that are offered to borrowers with ideal financial qualifications. Your FICO scores, plus other financial qualifications, will determine your access to rates or rates similar to them. Your | more...

August 5, 2015

FHA Condo Loans: Site Condos and Manufactured Housing Condo Projects

By Joe Wallace

In our last post we discussed basic eligibility rules for FHA condo loans–a condo project must be on or added to the FHA approved list in order to be approved for an FHA mortgage. But there are additional rules in some cases. For example, site condo projects don’t require being added to the FHA approval list IF those condo projects meet certain requirements. These requirements may vary depending on the nature of the condo project, state law, and other factors. The FHA condo project requirements are found in a PDF file you can download directly from the FHA/HUD official site. It contains the following provisions for site condos: Condominium project approval is not required for Site Condominiums meeting all of the below defined requirements. Site Condominiums are defined as: –Single | more...