Articles Published in: 2015

December 1, 2015

FHA Loans And HUD 4000.1: What The Lender Must See In Your Credit Report

Ever since the new FHA home loan rules for single-family mortgage loans were published in HUD 4000.1, we have been reviewing the new rules and publishing some of the most pertinent changes in policy, restatements of existing policies, and new FHA home loan rules. The FHA and HUD did rewrite, revise, and change portions of the rulebook to update, improve, or clarify those sections. One area that’s important to know about HUD 4000.1 is its instructions to the lender about credit reports. Do you know what the lender must look for, according to HUD 4000.1, in your credit report? To begin with, HUD 4000.1 instructs the lender, “Credit reports must contain all information from at least two credit repositories pertaining to credit, residence history, and public records information; be in | more...

December 1, 2015

Mortgage Rate Trends: Flat After The Long Weekend

By Joe Wallace

Monday saw no significant activity for mortgage loan interest rates following the long weekend. Tuesday could be–barring any breaking news or unexpected investor activity–equally quiet in anticipation of very important economic data releases coming later in the week. Wednesday through Friday there is increased potential for volatility based on the contents of reports including employment statistics, jobless claims, and more. Depending on the contents of these reports–and any breaking news that may occur in the meantime domestic or international–there’s increased risk of upward movement on mortgage loan rates this week. Industry professionals seem to be using the word “lock” more, pointing out that the closer we get to these economic data releases, the higher the risk of floating, or delaying an interest rate lock commitment with the lender in hopes | more...

November 30, 2015

FHA Loans After A Deed-In-Lieu Of Foreclosure

By Joe Wallace

A reader question came in recently asking about the possibility of getting an FHA home loan following a deed-in-lieu of foreclosure (DIL) action. “Is a deed-in-lieu derogatory on a credit report?” was one of the questions. The answer to that is that yes, a deed-in-lieu is considered a negative on your credit report. But FHA loans do offer some hope for borrowers who have since the deed-in-lieu established good credit once more. FHA loan rules in HUD 4000.1 cover the requirements in these circumstances for single-family “forward mortgages” after a deed-in-lieu of foreclosure, and those rules include mandatory waiting times or “seasoning periods” following the DIL. When can a borrower apply for a new FHA home loan after a deed-in-lieu? According to HUD 4000.1: “A Borrower is generally not eligible | more...

November 30, 2015

Mortgage Loan Interest Rate Trends: Holding Steady on Black Friday

By Joe Wallace

Thursday was Thanksgiving, and with banks closed and the markets also not doing business, it was a short week. Mortgage loan rates stayed absolutely quiet on Friday, no surprise there as all eyes were on the Black Friday shopping news and other developments. But the coming week has some important scheduled economic data releases including jobless claims and the employment situation report. Factory orders is also a report due out this week–lots of potential indicators as to where the economy is heading (or is currently at) and that will no doubt fuel speculation about the Fed’s decisions about a possible December rate hike. In short, there is potential for volatility this week that borrowers on the fence about locking or floating should consider while making the choice. Floating could get | more...

November 27, 2015

FHA Loan Limits For 2016?

By Joe Wallace

Close to the end of each calendar year, the FHA and HUD issue a set of FHA loan guarantee limits for the coming new year. These limits, issued by county and variable depending on the housing market and other factors, do not put a cap on the amount of the actual loan you can apply for under the FHA single family home loan program, but the limits do regulate the amount of the loan guarantee by the government. The FHA loan limits are described on the FHA/HUD official site–the following information was issued last year and effective for the 2015 calendar year: “Each year, FHA recalculates its national loan limit based on a percentage calculation of the national conforming loan limit.” “Depending on those limits, FHA’s minimum national loan limit | more...

November 27, 2015

Mortgage Loan Interest Rate Trends: Flat Ahead of Holiday Break

By Joe Wallace

Mortgage loan interest rates were described by market watchers as “flat” on Wednesday before the Thanksgiving holiday. Markets were closed on Thursday and while some volatility is possible the day before a holiday, everything was basically quiet. Friday’s trading day may or may not be marked by some movement of the mortgage rates (that hasn’t happened at the time of this writing) but industry professionals don’t expect any major developments to occur until next week when scheduled events, breaking news, and other factors could conspire to move rates up or down depending on investor reaction to those things. Next week there is some potential for volatility due to scheduled data releases. Jobless claims, non-farm payrolls, and unemployment figures all come out late in the week–those economic data releases do have | more...

November 26, 2015

Happy Thanksgiving 2015!

By Joe Wallace

We pause from our usual discussion of FHA loans, answering reader questions about FHA mortgages and refinancing, and FHA loan rules to celebrate the holiday with friends and family. Thank you for reading! We look forward to resuming our normal posting schedule after the holiday. Have a safe and happy Thanksgiving!

November 25, 2015

HUD Settlement With Illinois Landlord Over Lead Hazard

By Joe Wallace

The FHA/HUD official site has issued a press release announcing a settlement in a case involving lead hazards in Illinois rental properties. This may seem at first glance to have nothing to do with FHA home loans. But this case is an important reminder of why it is so important to report issues connected with fair housing, hazardous conditions in housing, and related issues–the victims in cases like these are often the only defense against continued violation of federal laws, environmental guidelines, etc. According to HUDNo. 15-151, the Department of Housing and Urban Development, “announced a settlement with a Rockford, Illinois landlord to resolve a claim he failed to inform tenants, some with young children, that their homes may contain potentially dangerous lead.” According to the press release, the agreement | more...

November 25, 2015

Mortgage Loan Interest Rate Trends: Holding Steady After Some Upwards Movement

By Joe Wallace

Monday say mortgage rates moving slightly higher, while on Tuesday rates held steady. There’s some market volatility this week for reasons that include the Thanksgiving holiday–rates may well move into a defensive posture on Wednesday in anticipation of the down day on Thursday. Add to that the uncertainty over a Fed interest rate hike in December and you have a combination of factors that equals a risky time to float, at least in the minds of some industry pros. 30-year fixed rate conventional mortgages are, at the time of this writing, between 4.0% and 4.125% depending on the lender (best execution). The rate changes we’ve seen this week so far may be reflected in closing costs rather than an actual higher interest rate, so borrowers should know that when they | more...

November 24, 2015

HUD 4000.1 On Appraisals: Sewage Systems

By Joe Wallace

In a recent blog post, we examined what FHA loan rules in HUD 4000.1 say about water utility systems. Borrowers and sellers alike should know the FHA stance on public utilities–especially where it comes to water hookup: “The Mortgagee must confirm that a connection is made to a public or Community Water System whenever feasible and available at a reasonable cost. If connection costs to the public or community system are not reasonable, the existing onsite systems are acceptable, provided they are functioning properly and meet the requirements of the local health department.” That’s part of the entry in HUD 4000.1 about water utility systems, but there is also a separate entry for sewage. This entry begins by basically restating the above for clarity: “The Mortgagee must confirm that a | more...