Articles Published in: January 2016

January 22, 2016

Mortgage Rate Trends: Sideways

Mortgage rates hit lows not seen in many months at the end of last week, and in spite of some small amount of lost ground we still see mortgage rates at sub-four percent lows at the time of this writing. Thursday saw 30-year fixed rate conventional mortgage loan interest rates staying, best execution, in a range between 3.75% and 3.875%. FHA mortgage rates are holding steady at the time of this writing at 3.5% (best execution) which is a far better comfort zone to fall into than the previously long-held 3.75%. How long FHA rates will remain here isn’t clear but the mortgage rates today held fast in spite of some market conditions that ordinarily would put upward pressure on rates. So it’s clear that there’s some potential for rates | more...

When Is An FHA Loan Better Than A Conventional Loan?

January 21, 2016

FHA HECM Loan Facts And Questions

By Bruce Reichstein

In our last blog post we discussed some of the basics about the FHA reverse mortgage loan program known as the Home Equity Conversion Mortgage. Here are some commonly asked questions about the program and the answers you should know: What Are The Property Requirements For An FHA Reverse Mortgage? According to the FHA official site, properties eligible for an FHA reverse mortgage must meet all FHA property standards and flood requirements. The eligible property types are: –Single family home or 2-4 unit home with one unit occupied by the borrower –HUD-approved condominium project –Manufactured home that meets FHA requirements Are Manufactured Homes Eligible For FHA Reverse Mortgages? As mentioned above, FHA loan rules do technically permit HECM loans for mobile homes. However the participating lender may or may not | more...

January 21, 2016

Qualifying For An FHA Reverse Mortgage

By Joe Wallace

One commonly asked question about the FHA home loan program is whether or not FHA insures or guarantees reverse mortgages. The FHA does have a reverse mortgage loan program, called the Home Equity Conversion Mortgage or HECM for short. Who qualifies for an FHA HECM loan and what are the basic ground rules? To start, it’s very important to understand the difference between an FHA HECM loan and traditional refinancing. According to the FHA official site, “A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you.” FHA HECM loans are not like standard home equity loan or second mortgage | more...

January 20, 2016

FHA Appraisals: A Reader Question

By Joe Wallace

A reader got in touch recently to ask about an FHA appraisal. “…septic system…was discovered bad after closed on and moved in. The home had been for sale for over a year and unoccupied for 6-8 months. FHA appraisal didn’t do any inspection of this system and it appears they should have due to the length of time it hadn’t sold or been unoccupied. It has been replaced and trying to be compensated for the expense. Thoughts?” It’s very important for all borrowers to understand that an FHA appraisal is NOT a home inspection. Once complete, the FHA appraisal should not be taken as any sort of stamp of approval from the FHA that a home is free of defects. Borrowers should ALWAYS pay for the optional (but extremely important) | more...

January 20, 2016

Proper Use Of The FHA Logo–Why You Need To Know

By Joe Wallace

The FHA and HUD have specific rules about how the FHA logo may be used by lenders and advertisers. To the typical loan applicant, this may seem to be completely irrelevant. The initial reaction to this information is likely to be, “So what?”. But if you receive third-party advertising, or see ads with the FHA logo used improperly, it may be an indication that there’s a potential scam in progress. Not all improper use of the FHA logo is evidence of fraudulent activity–sometimes ignorance of the FHA regulations that cover use of the government’s logos is a factor. But other times there may be a deliberate attempt to mislead a potential customer into thinking that the advertisement or offer is government-approved, government-sponsored, or government initiated. What do FHA loan rules | more...

January 19, 2016

FHA Loan Questions: Tax Service Fees

By Joe Wallace

A reader got in touch with us recently to ask a question about the allowable fees and expenses associated with FHA new purchase home loans (also known as “forward mortgages”). The gist of the question–can an FHA loan applicant be charged a tax service fee as part of closing costs or other loan-related fees and expenses? The answer to this question and others like it can be found in HUD 4000.1, in the portion of the rule book titled Part III Servicing And Loss Mitigation. This section includes a list of prohibited fees and expenses–costs that cannot be charged to the borrower. That list includes the following information: “The Mortgagee must not charge the Borrower for the following services: –costs of telephone calls, telegrams, personal visits with the Borrower, certified | more...

January 19, 2016

Mortgage Loan Interest Rate Trends: 180-Day Lows

By Joe Wallace

Ahead of the three-day weekend, Friday saw mortgage rates break some new ground–rates that, best execution, we havent’ seen in quite some time. Rates broke the four percent zone and began moving lower for both conventional and FHA mortgages. How long this trend may last remains to be seen, but some sources report oil prices and stock market woes as being responsible for at least a chunk of the improvement in mortgage rates we are seeing at the time of this writing. 30-year fixed rate conventional mortgages left the four percent range altogether and headed into best execution territory at a range between 3.75% and 3.875%. On many days where there is improvement, FHA mortgage rates tend to lag behind and remain in a comfort zone (3.75% has been the | more...

January 18, 2016

Celebrating Martin Luther King, Jr. Day

By Joe Wallace

Happy MLK Day! We pause from our regular schedule of answering reader questions, posting FHA and HUD news and discussing the finer points of FHA home loans to observe the holiday. Banks, financial markets and government agencies are also closed on this day to recognize the contributions and life of Dr. Martin Luther King, Jr. We’ll resume our usual posting schedule tomorrow.

January 15, 2016

HUD Housing Report: Rising Equity, Fewer Homeowners “Underwater”

By Joe Wallace

The Department of Housing and Urban Development (HUD) has issued a housing market report on its official site–“Measuring Progress in the Housing Market” examines the state of the market near the end of the old year and noted that equity is rising, while the number of homeowners still underwater in the wake of the Great Recession is going down. “As 2015 came to a close, we saw our housing market reach key milestones on the path to recovery homeowners equity rose again, the number of homeowners in negative equity continues to decline, and purchases of new homes increased. Its clear that we must continue to support programs that will allow more American families and homeowners to recover from the Great Recession.” HUD offers this report as a regular feature of | more...

January 15, 2016

HUD Charges Three Foreclosure Rescue Companies With Fraud, Discrimination

By Joe Wallace

HUD is bringing charges against three California foreclosure relief/loan modification companies according to a press release issued on the HUD official site. According to HUDNo.16-002, the agency is bringing charges against, “…three Modesto, California, home loan modification companies and nine of their agents with violating the Fair Housing Act by targeting Hispanic homeowners” for their national origin. As mentioned in the press release, laws passed as part of the Fair Housing Act prohibit discrimination in housing transactions (to include rental properties, public housing, and mortgage loans” because of national origin. “Families struggling to stay in their homes need real help, not false promises that make a bad situation worse,” said Gustavo Velasquez, HUD Assistant Secretary for Fair Housing and Equal Opportunity, who was quoted in the press release. He adds, | more...