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Articles in Category: FHA Lenders

FHA Loan Rules: Verification Of Employment

When you apply for an FHA mortgage, your lender will need a variety of documentation from you about your income, assets, debts and employment. In fact, employment verification is one of the major steps in the FHA loan approval process. But how does your lender verify you are working with a current employer? According to the rules printed in HUD 4155.1, the lender will require a current pay statement and a written Verification of Employment (VOE). Not all FHA loan applicants may be able to furnish a written VOE, so the FHA loan rule book lists some acceptable alternatives. Chapter One, Section B states: “As an alternative to obtaining a written VOE, the lender may obtain the borrower’s • original pay stub(s) covering the most recent 30-day period, and • | more...

 

Happy Labor Day!

Happy Labor Day! Banks and the markets that affect FHA mortgage rates are closed today. We pause from our usual posts about FHA home loans and answering reader questions to enjoy the holiday. Our regular post schedule resumes tomorrow, Tuesday September 2, 2014. Thanks for reading!  

 

FHA Mortgage Rate News For Friday August 22 2014

If you are looking for an FHA home loan, chances are good you are paying attention to the rise and fall of FHA mortgage rates. There are many reason why these rates can change day to day or week to week. One factor—economic data releases that suggests weakness in the economy. This data can influence rates and push them lower, or, conversely, when economic/jobs data indicates improvement, rates can and sometimes do move higher as a result. But other factors can push rates higher or lower, too. We found a good example of that recently–mortgage rates moving lower based on investor reaction to world headlines. Last Friday, mortgage rates hit their lowest levels in the last eight weeks or so. That drop in rates was attributed to how investors reacted | more...

 

FHA Loan Approval, FHA Loan Denial: The Process

When you apply for an FHA loan, sometimes the hardest part is waiting to hear back from the lender that the loan has been approved and all can move forward. Did you know that FHA loan rules have a process for the lender to follow when the loan has been approved or denied? HUD 4155.1 has the guidelines and instructions to the lender for loan approval or rejection. Chapter One of this document has a section called Borrower Approval Or Rejection and tells the lender that, when the loan has been approved, there are a set of steps to be followed. The lender: • records the results of the credit analysis on the HUD-92900-LT, FHA Loan Underwriting and Transmittal Summary • enters any modification of the mortgage amount or approval | more...

 
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FHA Loan Rules For Cosigners: A Reader Question

A reader asks, “How can a person sign a mortgage note but not have liability to repay the obligation?” FHA loan rules mention cosigners as a non-occupying parties who must sign the mortgage note but are not obligated when it comes to financial liability. According to HUD 4155.1, the lender must perform due diligence with the cosigner the same as with the borrower: “When determining the creditworthiness of borrowers, coborrowers, or cosigners, the underwriter considers their • income • assets • liabilities, and • credit histories.” How does the FHA define the cosigner? Let’s start by looking at the FHA definition of the borrower and co-borrower: “Both occupying and non-occupying borrowers and coborrowers • take title to the property at settlement • are obligated on the mortgage note, and • | more...

 

FHA Reverse Mortgage Loan Rules For Occupancy: A Reader Question

A reader asks, “My mother-in-law is sole owner of her home. she remarried and acquired a reverse mortgage. She is getting a divorce. unfortunately, she was force out of her house because of his violence. My question is how long can he live in the house if she is not there?” This situation calls for a lawyer–the laws of the reader’s state would definitely apply here. However, there is a very important FHA loan rule on HECM loans that borrowers need to be aware of and that definitely applies in this circumstance. FHA HECM loans require occupancy. A borrower who no longer occupies the home that secures an FHA HECM loan can and at some point definitely could have the entire loan declared due in full because failure to maintain | more...

 

Happy Independence Day!

Today we’re pausing the normal day-to-day routine answering reader questions, writing about FHA home loan, and FHA-related news that affects you; we’re celebrating the Fourth of July holiday and our usual posting schedule will return on Monday. Thanks for reading and have a safe, happy holiday!

 
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FHA Appraisal Rules For Foundations: A Reader Question

A reader asks, “We are up for a FHA refinance and the appraiser noted that we have a crack in our foundation. We have never had water in the basement ever and it hasn’t moved since i originally purchased the home. We are waiting to hear back from our lender. What is the likelihood this loan will be denied?” There are several issues that apply in a situation like this including the severity of the foundation problem. Not knowing that specific information makes it hard to know which way the call might go but it’s impossible to speculate what one financial institution might do. But that’s not the most relevant issue at work here. State or local building code may address the foundation issue specifically. If the home is not | more...

 

FHA Loan Approval and Rejection

When you fill out an FHA loan application, sometimes the hardest part of that entire process is waiting to get word on FHA loan approval or rejection. FHA loan rules in HUD 4155.1 instruct the lender on exactly what should happen once the loan is approved or denied. In HUD 4155.1 Chapter One, Section A, we find the following: “The lender is responsible for notifying the borrower of the approval, either in writing or verbally, immediately after receipt of the underwriter’s decision.” What happens when the loan is disapproved? Chapter One says: “When a loan is rejected, the lender must immediately complete • a rejection notice consistent with the requirements of Regulation B and, • when required, an Equal Credit Opportunity Act (ECOA) notice, forwarded to the borrower. At least | more...

 

FHA Loan Downpayment Sources: Loans

There are many questions about the required minimum downpayment for FHA home loans. Borrowers are required to put a minimum amount (3.5%) down on the FHA loan, and the money used to make this down payment must come from what the FHA terms “approved sources”. Those sources can include the borrower’s own money from savings, investments, cashed-in stocks, and many other accounts. Why does the FHA put scrutiny on the sources of down payment money? One reason is to avoid conflicts of interest between lender and borrower–the lender cannot provide down payment funds to the borrower, for example. A borrower who cannot afford to make a down payment out-of-pocket may need to apply for a collateralized loan for some or all of the downpayment amount. FHA loan rules permit this | more...