Articles in Category: FHA Lenders

October 7, 2015

FHA Loan Appraisal Rules: “Second Appraisal” Requests

We get lots of questions about the FHA appraisal process in the comments section. Here is one of the most recent, which raises an important question about “replacement appraisals” or any request for a new appraisal that has to do with a dispute over valuation of the property. The reader asks, “I have a buyer who is buying a home. The home they are buying already had an appraisal completed. That deal fell through and my buyers offer was accepted. The sellers agent said that the original appraisal came in short and asked that we order a new one.” “He said his seller insists on a new appraisal because the original one done a few week before was less that the purchase price. Is is possible to request a new | more...

September 26, 2015

FHA Loan Rules In HUD 4000.1 And Past Mortgagee Letters From FHA/HUD

By Joe Wallace

When the new FHA single-family home loan policy hand book (HUD 4000.1) took effect, it became the official go-to reference for FHA single family new purchase loans and refinance loans. That means that the old FHA loan rule books for single family transactions, including HUD 4155.1 and HUD 4155.2, became inactive as of the launch date for HUD 4000.1. It also means that a large amount of previous FHA/HUD correspondence also became inactive. The FHA/HUD official site has an archive of all FHA mortgagee letters (ML for short, which feature policy changes, updates, modifications, etc.) but there are many of those that are now inactive, superseded by HUD 40001. There is no way to list all the mortgagee letters, handbooks, and other items that have been made inactive, but the | more...

September 25, 2015

HUD 4000.1 Questions: FHA Loans For Homes In Flood Zones, Flood Insurance

By Joe Wallace

With the publication of HUD 4000.1, the new Single Family Home Loan handbook, there have been plenty of changes, alterations, restatements of policy and other issues borrowers and lenders alike should be aware of. We’re examining some of the most frequently asked questions about policies found in HUD 4000.1 to help borrowers and lenders know what current policy, as found in the new handbook, is on specific issues. One of those issues has to do with flood insurance and flood zone determination. FHA loan rules have standards for new construction and existing construction homes; let’s examine what the rules in HUD 4000.1 say about flood insurance for existing construction. According to the FHA official site, rules for flood insurance include the following requirement of the lender: “The lender must determine | more...

September 14, 2015

FHA Home Loans and Legal Questions

By Joe Wallace

From time to time we get questions in the comments section about legal issues associated with an FHA home loan transaction. One of the most recent involved a situation where a reader tells us: “…the underwriter denied loan due to not enough in account for closing. The sellers realtor contacted our loan officer and asked if we had enough money to pay the closing costs our loan officer told her no, at that point the sellers realtor stated they did not know if they wanted to deal with us. Is that legal for our loan officer to give the sellers realtor this information…” It cannot be stressed enough that in situations where there is a legal question, a lawyer with experience in real estate law should be consulted. We cannot | more...

August 11, 2015

HUD Mortgage Board Takes Action Against Two Lenders

By Joe Wallace

A press release on the FHA/HUD official site announces HUD action against two Texas-based lenders. HUDNo.15-102, published Monday August 10, 2015, states: “The U.S. Department of Housing and Urban Developments Mortgagee Review Board (MRB) today announced settlement agreements with two Texas mortgage lenders following allegations they engaged in a scheme to charge bogus fees to consumers, which improperly inflated mortgages for borrowers purchasing newly constructed manufactured housing.” 11 violations of FHA lending rules were alleged in the case. According to the press release, the HUD Mortgage Review Board claims, “American Home Free Mortgage, LLC (AHFM) of Prosper, Texas, artificially increased mortgage costs by an average of $12,000 per loan through illegitimate fees paid to a company owned and operated by its sales manager. In addition, HUD alleged that there were | more...

August 6, 2015

FHA Loans And Derogatory Credit Information

By Joe Wallace

Many borrowers want to know what might be considered a problem when it comes to the lender’s review of credit histories and FICO scores. Lender standards apply in all such situations, so FHA minimums aren’t the only requirements to be concerned with, but in general there are some credit issues that could require the lender to process your loan paperwork “by hand” or take a closer look at your financial qualification data. What are these issues? According to the FHA/HUD official site, delinquency is an important factor: –Bankruptcy, foreclosure, collection account, charge-off, tax lien, or judgment; –Any mortgage trade line including mortgage line-of-credit payments, during the most recent 12 months, consisting of: –3 or more late payments of greater than 30 days, or –1 or more late payments of 60 | more...

August 5, 2015

FHA Mortgage Rate Trends: Higher After Fed Talk Of Rate Hike

By Joe Wallace

Mortgage loan interest rates have been recovering, but on Tuesday the Fed’s discussion of a possible September interest rate hike caused a reaction that brought rates higher. 30-year fixed rate conventional mortgage loan interest rates, best execution, moved back to 4.0% after a brief flirtation with the high three percent range, though some lenders may still be offering sub 4% rates to the most qualified applicants. At the time of this writing, FHA best execution rates are still at 3.75% which is a change from the previously held range of rates with 4.0% at the upper end. Remember, best execution means rates that are offered to borrowers with ideal financial qualifications. Your FICO scores, plus other financial qualifications, will determine your access to rates or rates similar to them. Your | more...

May 6, 2015

FHA Mortgage Loans and the Fair Credit Reporting Act (FCRA)

By Joe Wallace

Most FHA loan applicants are well aware when they apply for a new home loan that they are about to give permission to the lender to do an extensive review of FICO scores, loan repayment history, financial responsibility in general, income, and much more. But did you know that there are federal laws that govern how a lender must proceed in order to be fair during the process? These laws also explain in general what to do if negative credit information requires “adverse actions” such as denial of a loan application. The Fair Credit Reporting Act instructs lenders on how to proceed in such cases, and FHA loan rules in HUD 4155.2 Chapter One, Section B include the following: “The Fair Credit Reporting Act (FCRA) is intended to control collection | more...

May 5, 2015

Are You Ready For An FHA Home Loan?

By Joe Wallace

If you are considering an FHA home loan, are you ready to fill out the paperwork? Here are some important questions to ask if you are considering applying in the near future: What’s My Credit Score? If you don’t know your current credit score, chances are good that you are not prepared to begin filling out FHA loan paperwork. Before you commit to applying for a new home loan, it’s strongly recommended that you pull your most recent credit report, check your FICO scores and see what your lender will see when he or she requests the same information. If you don’t know what the lender will see, find out before the bank does. What Does My Payment Record Look Like? Have you missed ANY payments in the 12 months | more...

When Is An FHA Loan Better Than A Conventional Loan?

April 3, 2015

April Is Fair Housing Month

By Joe Wallace

April is Fair Housing Month. The FHA and HUD have made announcements every year at this time to raise public awareness of fair housing laws such as the Fair Housing Act and FHA/HUD policy for equal housing access for all regardless of gender, race, national origin, belief, sexual orientation, disability, family status, etc. “Every American deserves a fair chance to secure safe and stable housing,” said HUD Secretary Julián Castro, who was quoted in a new mortgagee letter published by the FHA/HUD. “At the core of everything we do to improve housing opportunities is a firm belief that no family should ever be denied the opportunity to own or rent a home because of what they look like, where they come from, how they get around, how they speak, who | more...