Articles in Category: HUD Regulations

March 25, 2016

HUD Reaches Settlement In California Housing Discrimination Case

Housing discrimination affects people in all stages of the journey to find a home. It doesn’t matter whether you are a renter, a prospective borrower, or somewhere in between; the rules that make up the Fair Housing Act apply across the board for those looking for a place to live. The FHA/HUD official site recently published a press release announcing a settlement in a California housing discrimination case; sometimes the victims of housing discrimination are the only ones who can prevent further discrimination from happening. Those who report their experiences do a service to themselves and to future borrowers and renters by helping to end illegal practices such as the ones mentioned in HUDNo.16-035: “The U.S. Department of Housing and Urban Development (HUD) announced today an agreement with a Cupertino, | more...

March 24, 2016

HUD Offers Grants to Clean Up Lead Paint Hazards in the Home

By Joe Wallace

When you buy a home with an FHA mortgage, one of the appraisal requirements that must be met on certain older homes is that there must be an awareness of potential lead paint hazards in the property. A home that was built prior to 1978 may contain lead paint, and HUD 4000.1 page 115 states clearly: “If the Property was built before 1978, the seller must disclose any information known about lead-based paint and lead-based paint hazards before selling the house, in accordance with the HUD-EPA Lead Disclosure Rule (24 CFR 35, subpart A, and the identical 40 CFR 745, subpart F). For such Properties, the Mortgagee must ensure that: –the Borrower has been provided the EPA-approved information pamphlet on identifying and controlling lead-based paint hazards (Protect Your Family From | more...

March 4, 2016

Ordering a Second FHA Appraisal: The Rules in HUD 4000.1

By Joe Wallace

There are many questions about the FHA appraisal process–we get many in the comments section asking about the nuances of FHA appraisals. One typical question has to do with when a second appraisal is appropriate or permitted. Can a second FHA appraisal be ordered if the borrower or lender doesn’t agree with the outcome of the original? HUD 4000.1 spells out the rules for FHA appraisals including “second appraisal” requirements. They include the following: “The Mortgagee is prohibited from ordering an additional appraisal to achieve an increase in value for the Property and/or the elimination or reduction of deficiencies and/or repairs required. The Mortgagee may order a second appraisal for Mortgages that are in accordance with requirements on Property Flipping.” FHA policy, based on the reading above, is clear–you can’t | more...

March 3, 2016

Settlement Reached In Kansas “Redlining” Mortgage Discrimination Case

By Joe Wallace

The Department of Housing and Urban Development (HUD) has announced a settlement in a mortgage discrimination case involving First Federal Bank of Kansas City. According to a press release at the FHA/HUD official site, “The U.S. Department of Housing and Urban Development (HUD) announced today an agreement with First Federal Bank of Kansas City to resolve allegations of redlining against African American mortgage applicants. HUD and two fair housing organizations claimed the lenders designated service area effectively excluded African American neighborhoods, limiting residential mortgage lending to persons based upon their race.” Federal law makes it illegal to discriminate against mortgage loan applicants or anyone seeking housing because of their race. According to the press release, “Homeownership should never be affected by the color of a persons skin. This agreement helps | more...

February 26, 2016

FHA Loan Mortgage Insurance Premium Rules

By Joe Wallace

When you purchase a home using an FHA mortgage, you’ll be required to pay an Up Front Mortgage Insurance Premium (UFMIP) and monthly mortgage insurance premium (MIP). The rules governing this mortgage insurance are found in HUD 4000.1 and it’s important to know them before you start budgeting and planning for your new mortgage. FHA loan rules covering this insurance begin by defining terms. “FHA collects a one-time Upfront Mortgage Insurance Premium (UFMIP) and an annual insurance premium, also referred to as the periodic or monthly MIP, which is collected in monthly installments.” One thing important for borrowers to know is that the FHA does not consider these payments to be part of the mortgage guaranty limit–this is a fee assessed after those limits are calculated, even though the Up | more...

February 12, 2016

HUD Proposes Changes To Manufactured Housing Standards

By Joe Wallace

One common question asked by some about the FHA single-family home loan program is whether an FHA mortgage can be used to purchase an RV-type mobile home or a houseboat. The answer in both cases is no because a house boat or recreational vehicle/RV motor home cannot be affixed to a permanent foundation. Therefore they cannot be sold as “real property” under the law, which makes them ineligible for an FHA mortgage. The lines between recreational vehicles and manufactured housing or mobile homes can be blurry sometimes–why do some people confuse an RV with a mobile home? Foundation issues and real property status aside, it seems to be due to the fact that some people live out of their RVs in a similar way to a mobile home–they can be | more...

February 12, 2016

HUD Foreclosure Policy Updates: Reasonable Diligence and Delays

By Joe Wallace

Recently the FHA and HUD updated guidance to lenders with regard to foreclosures and the “reasonable diligence” required to make sure the foreclosure action happens in a timely manner. One of the biggest complaints about the foreclosure process is how long it can take for a financial institution or the entity that is to take possession of the property to do so. The new HUD guidelines require lenders to act in a reasonable time frame. According to mortgagee letter HUDNo.16-003, “…when foreclosure of a defaulted loan is necessary, mortgagees must exercise reasonable diligence in prosecuting the foreclosure proceedings to completion and in acquiring title to and possession of the property. However, the mortgagee letter adds: “When certain delays in completing foreclosure and acquiring possession are caused by circumstances beyond the | more...

February 11, 2016

FHA/HUD Alter FHA Loan Foreclosure Timeline Rules

By Joe Wallace

There have been many changes to FHA/HUD foreclosure policy. The latest of those changes comes via FHA Mortgagee Letter 2016-04, which adjusts the foreclosure timeline to comply with federal regulations known as Regulation X. According to the mortgagee letter, a previous mortgagee letter (2015-21) has been superseded in its entirety by this new set of guidelines. The new mortgagee letter “…provides updated guidance relating to HUDs regulatory requirement for mortgagees to utilize a loss mitigation option or initiate foreclosure within six months of the date of default. Specifically, this Mortgagee Letter: –reiterates the existing eight automatic extensions available to mortgagees when they are unable to initiate foreclosure within the allotted timeframe; and –introduces two new automatic extensions to align with the Consumer Financial Protection Bureaus Regulation X.” Specifically, “The Consumer | more...

February 10, 2016

HUD Settles Connecticut Fair Housing Discrimination Case

By Joe Wallace

The Department and Housing and Urban Development and a group of Connecticut landlords have reached a settlement in a housing discrimination case. According to a HUD press release, “The U.S. Department of Housing and Urban Development (HUD) today announced an agreement with a group of Connecticut landlords to resolve allegations they discriminated against families with children. HUD reached the agreement with New Britain-based Green New Britain, LLC, and PBJ Management, and their on-site property manager for allegedly refusing to rent a two-bedroom apartment to a single mother and her two young children.” Violations of Fair Housing Act laws can affect the home buying process at every level. In this case, the victims were renters, but plenty of people seek rental housing while searching for a new home to purchase. The | more...

February 9, 2016

HUD Updates Single Family Loan Foreclosure Policy

By Joe Wallace

One of the biggest complaints about the foreclosure process involves the length of time it can take for the lender to take ownership of a foreclosed property. This is important for many reasons, but delays in transfer of ownership can also result in delays in a borrower’s ability to become a property owner once more later down the line. The FHA and HUD have issued a mortgagee letter addressing this issue where FHA Title II and Reverse Mortgages are concerned. “Single Family Foreclosure Policy and Procedural Changes for HUD Title II Forward Mortgages and Reverse Mortgages” updates “Reasonable Diligence time frames” effective for all cases where the deadline for taking “First Legal Action to initiate foreclosure” occurs on or after January 1, 2016, according to the FHA/HUD official site. According | more...