Articles in Category: HUD Regulations

June 22, 2016

FHA Loan Questions: Restrictions On Resale

One type of frequently asked question that sometimes pops up involves whether or not FHA mortgage loans have any restrictions on the resale of a home. While FHA loan rules require a borrower to be free to sell the property whenever they wish, there are certain time restrictions on the resale of a home when it comes to purchasing a “flipped” house with an FHA mortgage. Specifically, HUD 4000.1 has a section dedicated to this practice, and addresses it accordingly. According to Page 140 of HUD 4000.1, “flipping” is defined as follows: “Property Flipping is indicative of a practice whereby recently acquired Property is resold for a considerable profit with an artificially inflated value, often abetted by a Mortgagees collusion with an Appraiser.” This practice is restricted when it comes | more...

June 15, 2016

FHA Home Loan Questions: Problems With The Home After Purchase

By Joe Wallace

One of the most important things a borrower can do is to pay for the optional home inspection prior to making the commitment to purchasing a home, or making the purchase of the home conditional on the results of the optional home inspection. FHA loans require an appraisal, which is NOT the same as a home inspection, and does not guarantee that the home is free of defects. Recently a reader asked us a question about a situation that may have involved a home inspection that didn’t catch a serious problem. “My daughter and son in law just bought a house two weeks ago with an FHA loan, they did pay for a home inspection which had small repairs to be done, once those were completed they closed on house | more...

June 13, 2016

HUD Announces First Healthy Homes Month

By Joe Wallace

The Department of Housing and Urban Development has announced that June is the first-ever Healthy Homes Month, and is working to raise awareness of hazards in the home including lead-based paint, asbestos, and ways to make the home a healthier environment. According to a press release at the HUD official site (HUD.gov), “Most Americans spend up to 90 percent of their time indoors, exposing them to home health and safety hazards ranging from asthma triggers to potentially deadly pollutants like asbestos and lead-based paint. To reinforce the connection between a family’s health and their homes, the U.S. Department of Housing and Urban Development is declaring this June as the first-ever National Healthy Homes Month.” The program was initiated by the HUD Office of Lead Hazard Control and Healthy Homes (OLHCHH), | more...

June 9, 2016

HUD Announces Agreement In Housing Discrimination Case

By Joe Wallace

The Department of Housing and Urban Development have announced an agreement in a housing discrimination case involving First-Citizens Bank & Trust Company. According to a press release on the HUD official site, the case involved allegations that the bank “denied mortgage loans to African American, Latino and Asian American mortgage applicants at a disproportionately higher rate than white applicants. HUD’s investigation concerned retail loans originated by the banks predecessor, First Citizens Bank and Trust Co., in 2010 and 2011.” According to the HUD official site, Gustavo Velasquez, HUDs Assistant Secretary for Fair Housing and Equal Opportunity, commented on the settlement, saying, “This agreement aligns our shared goals of promoting fair housing and expanding access to credit for qualified working families. HUD will use its enforcement powers to ensure that everyone | more...

June 3, 2016

June Is National Home Ownership Month

By Joe Wallace

HUD announced National Home Ownership Month this week, and the entire month of June will include special efforts to raise awareness of how “homeownership enhances lives and contributes to thriving communities we call home” according to a HUD press release. ‘Dare to Own the Dream’ is the theme of this year’s campaign, “reinforcing the long-held belief that owning a home remains one of the cornerstones of the American Dream”. According to the press release, a lot of things have changed in the eight years of the Obama administration. “…the nations housing market was in free-fall, unemployment was rising and many families were left feeling trapped and anxious about their mortgages. He immediately took action to address these issues and to protect the middle class. The steps he took helped millions | more...

June 2, 2016

HUD Announces Housing Counseling Committee

By Joe Wallace

In many of our blog posts, we encourage borrowers to contact the FHA/HUD directly to seek a referral to a local, HUD-approved housing counselor. Pre-purchase counseling can be a very important part of the home loan application process, especially for borrowers who are new to the mortgage loan process. In some cases, as with FHA reverse mortgages/HECM loans, counseling is required as a condition of loan approval. Borrowers can contact the FHA/HUD directly to request housing counseling by calling 1-800 CALL FHA. And now, thanks to action by HUD in compliance with the Dodd-Frank Act of 2010, a new committee is looking into ways to expand and improve housing counseling. According to a press release at the HUD official site, on Wednesday June 1, 2016, “this advisory panel will help | 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...

May 20, 2016

FHA Appraisal Rules: A Reader Question

By Joe Wallace

A reader got in touch with us recently to ask a question about wells and FHA loan approval. “Is a flow test required on a pre-existing drilled well in order to get financing using FHA? This is in a town where there is no public water and a drilled well is the normal. Well has passed all other test to determine all health safety and has been approved by the FHA appraiser.” FHA loan rules state that “Wells must deliver water flow of five gallons per minute over at least a four-hour period”. Furthermore, “The Mortgagee must ensure that new wells are drilled and are no less than 20 feet deep and cased. Casing should be steel or other casing material that is durable, leak-proof, and acceptable to either the | more...