Articles Published in: 2016

August 22, 2016

HUD Charges Georgia Landlords With Fair Housing Act Violations

The Fair Housing Act was passed to protect those in search of housing, whether they need to rent or purchase. Discrimination against a renter or potential renter is just as serious as discrimination against those who wish to purchase housing; many who want to buy a home must seek out rental property in the meantime and violations of the Fair Housing Act affect these renters who intend to be owners. The Department of Housing and Urban Development aggressively pursues cases of housing discrimination regardless of renter/buyer status and one of the most recent cases stems from a complaint lodged by a single mother in Georgia. According to a press release on the HUD official site, “The U.S. Department of Housing and Urban Development (HUD) today announced it is charging a | more...

August 19, 2016

FHA Loan Rules For Overtime Income

By Joe Wallace

A reader asks, “Can I use my current overtime income if Ive been working at this company 20 months but my previous company I also had overtime which I worked there for 1 year and my previous before that I worked for 4 years with overtime?” FHA loan rules require the loan officer to verify income that will be used toward calculating the borrower’s debt-to-income ratio. Only verifiable income can be used, which means the lender must determine that the income is stable, reliable, and likely to continue. Income from a variety of sources may be considered. Some FHA loan applicants have seasonal jobs, some have part-time employment, some get income from disability benefits, etc. All of these sources can be used provided they meet FHA loan standards. The same | more...

August 18, 2016

FHA Loans and 401K Income

By Joe Wallace

A reader got in touch with us recently in the comments section to ask a question about 401K retirement income as it relates to FHA loan approval. “Does the fact that you have a 401k count as income or does it benefit your chances in any way of getting a home loan?” FHA loan rules in HUD 4000.1 cover a variety of income sources including 401k income. Individual retirement account income from a 401K may be used to qualify a borrower for an FHA mortgage provided the income meets FHA and lender standards. HUD 4000.1 instructs the lender on how to review 401K income, beginning with a definition of it: “Individual Retirement Account (IRA)/401(k) Income refers to income received from an IRA.” With the definition spelled out, the FHA loan | more...

August 18, 2016

HUD Announces Federal Relief For Louisiana Flood Victims

By Joe Wallace

The Department of Housing and Urban Development has announced federal assistance for victims of recent flooding in Louisiana. According to HUDNo.16-122, “HUD will speed federal disaster assistance to the State of Louisiana and provide support to homeowners and low-income renters forced from their homes due to severe storms and flooding.” Earlier, the press release states, the President, “issued a disaster declaration for Acadia, Ascension, Avoyelles, East Feliciana, Evangeline, Iberia, Iberville, Jefferson Davis, Lafayette, Point Coupee, St. Landry, St. Martin, St. Tammany, Vermilion, Washington and West Feliciana” as well as East Baton Rouge, Livingston, St. Helena and Tangipahoaparishes. One of the benefits of this act is that victims of the flooding have access to foreclosure relief and other help. Families who may have been forced from their homes need to know | more...

August 17, 2016

FHA Loan Questions: Income Rules

By Joe Wallace

A reader got in touch with us to ask a question about FHA standards for income. “I am on contract and my lender just told me that I might not be qualify for FHA because of my income. Is that one of the requirements for FHA?” FHA loans require the borrower to financially qualify for the loan, which includes the lender making a determination about the borrower’s employment situation. While this reader question is far too general to answer with regards to the reader’s specific circumstances, we can observe the following about FHA home loans based on a reading of HUD 4000.1: The lender is required to verify a borrower’s income to insure it is stable, reliable, and likely to continue. Income that is deemed “verifiable” is allowed to be | more...

August 17, 2016

Mortgage Rate Trends: Up And Down Before Fed

By Joe Wallace

Mortgage loan interest rates are experiencing another week of ups and downs; on Tuesday rates were unchanged to slightly higher depending on the lender, and all eyes are on Wednesday’s Fed meeting minutes release. This has serious potential to move rates in one direction or the other depending on investor reaction to the contents of those minutes. Most of the current drama in this department has to do with the timing of any proposed Fed interest rate hike or the lack of an indication of same. The potential for another interest rate hike by the Fed creates volatility in the markets that affect mortgage loan rates, so the uncertainty here is a big X factor this week. On Tuesday, 30-year fixed rate mortgages were reported at a best execution 3.5%. | more...

August 16, 2016

FHA Loans and Social Security Income: A Reader Question

By Joe Wallace

A reader asks, “I am halfway though a 15 year mortgage on a 2009 manufactured home. I am disabled, collecting SSD and my wife works as a school teacher.Would I qualify to refinance my home?” FHA loans and refinance loans have rules that do permit the use of Social Security income to qualify for a loan, provided the income meets certain requirements. The lender is required to determine that the income is likely to continue. HUD 4000.1 has guidelines and instructions to the loan officer that include the following about Social Security and other disability benefits: “Disability Benefits are benefits received from the Social Security Administration (SSA), Department of Veterans Affairs (VA), other public agencies, or a private disability insurance provider. The Mortgagee must verify and document the Borrowers receipt | more...

August 16, 2016

FHA Loan Rules: Rental Income

By Joe Wallace

When purchasing a home with an FHA single-family loan, a prospective borrower may want to know whether rental income from the property to be purchased with an FHA mortgage can be counted in the borrower’s debt-to-income ratio. FHA loan rules do permit this under specific circumstances, and borrowers should know that FHA loan occupancy rules apply. Borrowers are required to occupy the home as their primary residence, but for those purchasing property with more than one unit, the rental issue is a factor many consider. The rules for rental income are found in HUD 4000.1 and include the following: “The Mortgagee may consider Rental Income from existing and prospective tenants if documented in accordance with the following requirements. Rental Income from the subject Property may be considered Effective Income when | more...

August 15, 2016

FHA Amends Rehab Loan Consultant Fee Policy

By Joe Wallace

The FHA has amended policies for the FHA 203(k) Rehabilitation Mortgage Insurance Program where the 203(k) Consultant Draw Inspection Fee is concerned. According to the FHA official site, the rule change is designed to revise the maximum fee that may be charged by a 203(k) consultant for the “Draw Inspection” Mortgagee letter 2016-12 states that the FHA and HUD continue to “analyze the overall Consultant Fee structure” established in 1995 for FHA rehab loans. In doing so, the FHA and HUD have “determined that the current $100 limit on the Draw Inspection Fee discourages consultant participation in the Section 203(k) program and has the potential to limit access to credit.” Consequently, the FHA has revised this fee limit. “The Consultant Draw Inspection Fee is amended to permit a fee that | more...

August 15, 2016

Mortgage Rate Trends: Ups and Downs

By Joe Wallace

Mortgage rates went higher and lower last week. They bounced higher Monday, recovered Tuesday, and repeated that cycle on Thursday and Friday. At week’s end, rates recovered back to 30-day lows, but there are a variety of scheduled economic data releases ahead that could push rates higher depending on investor reaction to them. Friday, 30-year fixed rate conventional mortgages wound up in range between 3.375 and 3.5% best execution, though some sources claim 3.375% is more available at the time of this writing. FHA mortgage loan interest rates are holding in their comfort zone at 3.25% best execution, though FHA rates can vary more among participating lenders. It pays to shop around. Best execution rates are offered to borrowers with ideal credit. Your FICO scores, loan repayment history and other | more...