Articles Published in: May 2016

May 31, 2016

FHA Loan Questions: The Good Neighbor Next Door Program

A reader asked us a question recently in the comments section about the HUD Good Neighbor Next Door program. “I am a 13 year veteran Corrections Officer of the Maryland’s DCSCS and I wanted to inquire as to whether or not I qualified for the Good Neighbor Next Door Program.” The HUD Good Neighbor Next Door program is mentioned on the FHA/HUD official site, which states, “Law enforcement officers, pre-Kindergarten through 12th grade teachers, firefighters and emergency medical technicians can contribute to community revitalization while becoming homeowners through HUD’s Good Neighbor Next Door Sales Program. HUD offers a substantial incentive in the form of a discount of 50% from the list price of the home. In return you must commit to live in the property for 36 months as your | more...

May 30, 2016

Happy Memorial Day 2016

By Joe Wallace

Today we pause our usual posts about FHA loans and related issues, in honor of Memorial Day. Well resume our regularly scheduled posts and answers to reader questions on Tuesday. Thanks for reading and be sure to thank the veterans in your life for all the service and sacrifices made in the name of freedom. To our veterans, thank you for serving!

May 27, 2016

FHA Appraisal Rules For Wells: A Reader Question

By Joe Wallace

A reader got in touch with us recently to take exception to a blog post we wrote in 2011 about FHA loan appraisal rules for sewer and septic systems. In that post, we state, “Sewer systems are not identical, but as long as the system is functioning properly and lives up to local codes, the FHA does not disqualify the home simply because a sewage or septic system isn’t the same as a typical suburban system in a metropolitan area.” The reader replies, “No, that is not true. FHA has own guidelines, they do not go by the state and local guidelines. We were set to close on a brand new home, we had a well inspection and water test which all complied with local guidelines and 3 days before | more...

May 26, 2016

FHA Refinance Loans: What You Should Know Before Applying

By Joe Wallace

Not all refinance loans are created equal, and not all FHA refinance loans have the same terms and conditions. Did you know that FHA refinance loans will, depending on the participating lender, allow you to refinance an adjustable rate mortgage (ARM) into a fixed rate but also may permit you to go from one adjustable rate mortgage to a new ARM loan? Qualified borrowers have a variety of refinance options open to them when it comes to rates, loan term, and related concerns. There are many things to consider when refinancing with an FHA mortgage. For example, you do not have to use your existing lender to refinance. You may shop around for a new lender to refinance your mortgage loan with. You are also not required to have an | more...

May 26, 2016

Mortgage Rate Trends: Sideways To Slightly Higher

By Joe Wallace

Ever since the release of the Fed minutes earlier this month there has been upward pressure on mortgage loan rates. The Fed is considering another interest rate hike sooner rather than later, and while a Fed rate hike is not a direct adjustment of mortgage loan rates, investor reaction to the hike and market activity can and often does react accordingly when the Fed acts in this way. In the last five business days there was only one day of recovery, while the rest of the time we’ve seen either “sideways” movement where rates didn’t change that much (best execution) overall but may have varied more among certain lenders. Wednesday saw rates moving sideways to slightly higher depending on the lender. 30-year fixed rate conventional mortgages had been operating in | more...

Can I buy a manufactured home with an FHA loan?

May 25, 2016

FHA Loan Appraisal Expiration Dates, Update Requirements

By Joe Wallace

One common question about FHA home loan rules involves how long an appraisal is considered valid before it can no longer be used. FHA loan rules for this topic are found in HUD 4000.1 and address both the age of the appraisal as well as the age of other documentation not considered “evergreen” or without an expiration date (such as divorce decrees, military discharge paperwork, etc). According to HUD 4000.1, in general terms the documents to be used for “…the origination and underwriting of a Mortgage may not be more than 120 Days old at the Disbursement Date. Documents whose validity for underwriting purposes is not affected by the passage of time, such as divorce decrees or tax returns, may be more than 120 Days old at the Disbursement Date.” | more...

What happens to my FHA loan in a natural disaster?

May 25, 2016

FHA Reverse Mortgages: Payout Options

By Joe Wallace

Recently we wrote about proposed changes to strengthen the FHA Reverse Mortgage loan program and about basics of the FHA Reverse Mortgage program. We left off with a promise to discuss how the reverse mortgage, also known as an FHA Home Equity Conversion Mortgage (HECM), pays out once the loan has closed. A HECM borrower’s payout (also known as a disbursement) depends on the nature of the HECM loan. The rules for cash back to the borrower differ based on whether the borrower has a fixed interest rate HECM loan or an adjustable rate HECM. The FHA/HUD official site states that borrowers who have adjustable rate HECM loans are eligible for the following payment options: Tenure-equal monthly payments as long as at least one borrower lives and continues to occupy | more...

May 24, 2016

FHA Loans: The Importance of a Home Inspection

By Joe Wallace

From time to time we handle reader questions asking about defects in homes discovered after purchase. When applying for an FHA home loan, an FHA appraisal is a requirement for loan approval, but a home inspection is an option the borrower is free to use (or not). But this “option” is an investment no borrower should skip, as FHA appraisals are not a guarantee that a property is free from defects or problems. One of the most common questions we get asked in this area is, “What can be done about (defective condition X) discovered in my home after my loan closed?” Our answer always involves asking whether the borrower paid for the home inspection or simply relied on the FHA appraisal to indicate that the home was potentially “approved” | more...

May 24, 2016

HUD Announces Housing Discrimination Settlement With Eden Management

By Joe Wallace

Housing discrimination affects those at all stages of finding a home, whether looking to buy or trying to find a rental unit. Housing discrimination cases are aggressively pursued by the Department of Housing and Urban Development (HUD), but often times the only way to stop further discrimination is for the victims to step forward to make a formal complaint. That’s exactly what happened in one case, which reached a settlement this week according to a press release from HUD. According to HUDNo.16-76, the agency has reached an agreement with Eden Management in Illinois; “…a $630,000 agreement with a group of Illinois property owners and a management company resolving allegations they violated the Fair Housing Act and Section 504 of the Rehabilitation Act of 1973 by using rental screening policies that | more...

May 23, 2016

FHA Appraisal Rules: Shared Wells

By Joe Wallace

From time to time we get asked very specific questions about the FHA appraisal process-some readers want to know about specific aspects of the appraisal and whether or not a certain condition is considered acceptable under FHA loan rules. As always, we like to remind everyone that FHA appraisal rules often are not the only ones that may apply for a given situation or with regard to a certain feature. In some cases FHA appraisal requirements don’t spell out a specific guideline but instead defer to the local or state building code. In other circumstances, FHA appraisal rules may be quite specific. One area where FHA appraisal rules are specific has to do with the nature of a property that is served by a shared well. HUD 4000.1 page 162 | more...