Articles Published in: 2017

September 14, 2017

What You Should Know About FHA 203(h) Loans For Disaster Victims

After Hurricane Irma and Hurricane Harvey, the Department of Housing and Urban Development has been issuing press releases as more federal disaster areas are declared in affected counties. When the government names such disaster areas, they become eligible for a variety of relief measures including FHA 203(h) loans for disaster victims. During this particular set of disasters, there’s been a trend( in news media and among those affected by the hurricanes) to refer to those who have experienced them as “survivors” rather than “victims”. While that is acknowledged and respected here, the wording used in official FHA/HUD guidance such as the FHA Single Family Home Loan Handbook (HUD 4000.1) is “victims” and for accuracy’s sake that’s how we’ll reference the materials when quoting from and discussing these references. What You | more...

September 14, 2017

HUD Announces Disaster Relief For Florida

By Joe Wallace

In the aftermath of Hurricane Irma, the Department of Housing and Urban Development has announced disaster relief measures for Florida following a presidential declaration of federal disaster areas in the state. According to a press release on the FHA/HUD official site, the following counties are now recognized as federal disaster areas: Broward, Charlotte, Clay, Collier, Duval, Flagler, Hillsborough, Lee, Manatee, Miami-Dade, Monroe, Palm Beach, Pinellas, Putnam, Sarasota and St. Johns counties. According to the release, HUD offers a variety of relief options to those in the affected areas including (but not limited to) the following: A 90-day moratorium on foreclosures and “forbearance on foreclosures of Federal Housing Administration (FHA)-insured home mortgages”. Making Section 203(h) loans available to those in the counties listed above. The 203(h) program “provides FHA insurance to | more...

September 13, 2017

HUD Announces Disaster Relief For Puerto Rico

By Bruce Reichstein

In the wake of Hurricane Harvey and Hurricane Irma, the Department of Housing and Urban Development has made announcements about disaster relief as certain parts of the country become federally-declared disaster areas. The latest of these is a press release from HUD on relief efforts to Puerto Rico. According to a press release on the FHA/HUD official site, “HUD will speed federal disaster assistance to the Commonwealth of Puerto Rico and provide support to homeowners and low-income renters forced from their homes due to Hurricane Irma.” That assistance includes a 90-day moratorium on foreclosure action for FHA mortgages, the availability of FHA rehab loans for disaster victims, and more. According to HUD, these options can help those in the affected areas recover, rebuild, or purchase a new home to replace | more...

September 13, 2017

Can I Get An FHA 203(h) Rehab Loan With Bad Credit?

By Joe Wallace

Can I get an FHA 203(h) rehab loan with bad credit? That question is a serious one in the wake of natural disasters such as Hurricane Harvey and Hurricane Irma. Borrowers who are in the process of fixing bad credit, catching up on their payments, or trying to improve their overall credit situation have enough to manage without the added complication of trying to repair or salvage a home damaged in a natural disaster. What are the FHA loan rules for credit qualifications when applying for FHA 203(h) rehab loans in federally-declared disaster areas? FHA Loan Credit Requirements For 203(h) Rehab Mortgages The FHA loan handbook, HUD 4000.1, instructs lenders processing 203(h) rehab loans and refinance loans to be as flexible as possible with credit requirements. That flexibility is governed | more...

September 12, 2017

FHA Loan General Credit Requirements

By Bruce Reichstein

Do you know what the general credit requirements are for FHA mortgage loans? Outside of FHA loan FICO minimums (580 or above for maximum financing according to HUD 4000.1, though lender standards may apply beyond this) and employment history, there are a set of standards listed in the FHA loan handbook. Those standards include instructions to the lender on how credit is to be analyzed and how credit data may be collected. Those standards include the requirement that a participating FHA lender must “analyze the Borrower’s credit history, liabilities, and debts to determine creditworthiness.” In the pursuit of this, the lender must get credit reports from “an independent consumer reporting agency”. The lender “must obtain a credit report for each Borrower who will be obligated on the mortgage Note. The | more...

September 12, 2017

Can I Use Disaster Relief For My FHA Loan Down Payment?

By Joe Wallace

Can I use disaster relief for my FHA loan down payment? That question is on the minds of many in the wake of hurricanes, forest fires, and other natural disasters. FHA home loans have a minimum required investment or down payment of 3.5% of the adjusted value of the home. Depending on circumstances including marginal credit scores, some transactions may require a higher down payment. But the down payment is required no matter what, and FHA loan rules state the down payment must come from approved sources. That means a borrower will be required to furnish the lender with information about the source of the FHA loan down payment. Borrowers can use cash saved at home, money from investments or savings clubs, even gift funds from approved sources. Those approved | more...

September 11, 2017

Can I Use A Power Of Attorney At FHA Loan Closing Time?

By Bruce Reichstein

Can I use a power of attorney when it comes time to close my FHA loan? That may not be a common question per se, but for those this issue affects, the answer can affect how the entire closing process is handled. There are many reasons why a power of attorney might be needed to close a legally binding financial transaction such as an FHA mortgage. A borrower may be called away for an urgent work or family need, military duty could prevent the borrower from being physically present, injury or illness, etc. FHA loan rules address the power of attorney issue in HUD 4000.1, which begins on page 345 by stating: “A Borrower may designate an attorney-in-fact to use a Power of Attorney (POA) to sign documents on their | more...

September 11, 2017

What Should I Know About FHA Home Loan Escrow Account Rules?

By Joe Wallace

What should I know about FHA loan escrow account rules? Depending on the nature of your transaction, lender standards, and other issues, you may be required to use an escrow account to complete or maintain your FHA mortgage. The rules for escrow accounts to be used in FHA loan transactions are found in the FHA loan handbook, HUD 4000.1. The section governing escrow includes guidance that such accounts must be established in accordance with procedures defined in the Real Estate Settlement Procedures Act. The escrow account must be maintained in order to meet monthly financial obligations including the following (where applicable) as found in HUD 4000.1: -hazard insurance premiums; -real estate taxes; -Mortgage Insurance Premiums (MIP); -special assessments, including any assessments related to a PACE obligation; -flood insurance premiums if | more...

Can I buy a manufactured home with an FHA loan?

September 8, 2017

What Does “Legal Restrictions On Conveyance” Mean?

By Bruce Reichstein

What does “legal restrictions on conveyance” mean? It’s a question some borrowers won’t need to ask, but it is one that can and often does affect some transactions-especially where condo loans are concerned. FHA loan rules require the property that is purchased with an FHA loan to be “freely assumable”. That basically means there can be no limits imposed on the owner of the property on selling or otherwise disposing of the property. The lender is required to make sure there are no legal restrictions on the borrower in this way. What kind of restrictions do we mean here? One type is the “right of first refusal” found in some condo owner association agreements. Depending on the wording of such agreements, the owner may be required to allow the condo | more...

Refinancing a Second Home With An FHA Mortgage Loan

September 7, 2017

Can I Buy A Condo Unit With An FHA Mortgage?

By Bruce Reichstein

Can I buy a condo unit with an FHA mortgage? Some people have a misconception about FHA mortgages, thinking they are intended for a certain income bracket, a certain type of home, or that it is possible to earn “too much income” to qualify for an FHA loan. None of those things are true. You cannot earn too much money to qualify, and you can explore options to buy a variety of property types up to and including condominium units. Yes, FHA condo loans are possible, but they have some unique requirements (see the section on the FHA “condo project approval” list) and certain property types may be listed as condos even if they are “detached dwellings”. The requirements for these units, sometimes known as “site condos” vary slightly from | more...