Articles in Category: HUD Regulations

August 4, 2015

FHA Loan Rules: Prohibited Payments And Loans

There is a group of rules in HUD 4155.2 that describes payments and loans that are not permitted under the FHA single-family home loan program. Chapter Six, Section A has a description of the rules preventing the payment of “unearned fees”, below market-rate loans and other practices. For example, Chapter Six instructs the lender: “A lender is not permitted to pay any fee, compensation, or thing of value other than for services actually performed, including –kick back fees –fees above that actually paid for the service –finders fees or payments to any party referring the loan –payment to a party that has received, or will receive other payment for the service, unless it is a commission for selling a hazard insurance policy at the borrowers request, and –fees prohibited by | more...

August 4, 2015

HUD Announces Multi-Million Dollar Anti-Discrimination Initiative

By Joe Wallace

The Department of Housing and Urban Development have announced a large amount of funding that has become available to fight housing discrimination. According to HUDNo. 15-097, HUD, ” …is making $39.2 million available to fight housing discrimination under HUD’s 2015 Fair Housing Initiatives Program(FHIP) Notice of Funding Availability (NOFA). This year’s funding notice also creates six new types of grants that support fair housing capacity building, education and outreach activities, and testing in rental and sales transactions.” Fair Housing laws affect all types of housing transactions including FHA mortgages. The $39 million is being made available to “support organizations interested in the enforcement of fair housing laws and policies as well as educating the public, housing providers, and local governments about their rights and responsibilities under the Fair Housing Act” | more...

July 28, 2015

FHA Loans, Foundation Trouble, And Home Inspections

By Joe Wallace

A reader got in touch with us to ask about a situation where a home with foundation problems was purchased with an FHA loan. The reader says a home inspector was not hired because the foundation issue was “supposed to be taken care of” prior to the borrower moving in. Later, the borrower discovered that no corrections to the foundation had been made and further problems were discovered. The main question was whether or not the borrower has any legal recourse in situations like these. FHA loan rules and the FHA/HUD official site are very specific when it comes to borrowers who rely on FHA appraisals and their outcomes instead of hiring a home inspector to take a more in-depth look at the property. The FHA appraisal is not a | more...

July 20, 2015

FHA Loans, Seller Concessions, and Cash To The Borrower

By Joe Wallace

We recently got a question about an FHA loan situation where the seller of the home agreed to pay 3.5% of the closing costs on a transaction. According to the reader question, the “actual permitted seller concessions” were much lower. The reader asked, “Since FHA would not allow cash back”, the buyer asked the seller for the difference of the two amounts to be paid to the borrower, “outside of closing” The question the reader asks: Is this legal? FHA loans do not permit cash back to the borrower except in the form of refunds. However, HUD 4155.2 does include some guidelines for seller concessions, which are limited to six percent of the sales price. Those guidelines do permit “monetary gifts” as we’ll read in a moment. Chapter Four of | more...

July 17, 2015

HUD Charges South Dakota Property Owners With Discrimination

By Joe Wallace

A press release on the FHA/HUD official site announces discrimination charges against the owners of a housing complex in South Dakota. According to HUDNo.15-091, the owners violated the Fair Housing Act by, “initially refusing to allow a resident with disabilities to have an emotional support animal. HUDs charge alleges that even after the resident obtained a support dog, the owners, Robert Christensen, Linda Christensen, and Viking Villas, LLC, placed overly burdensome requirements on the residents use of the dog.” At first glance this case may seem to have nothing to do with FHA home loans, FHA refinance loans or related issues. But for borrowers who want to purchase condo units with FHA loans, or for those who purchase a home in a community with a homeowner’s association, issues like these | more...

July 16, 2015

FHA Loans And Federal Law

By Joe Wallace

We’ve been discussing FHA loans, the Fair Housing act, and other federal laws lately. There have been many changes to applicable federal law in recent times that can and do directly affect the mortgage lending process. It’s no surprise that the FHA single family home loan program, being created by the federal government, would lead the way in pro-consumer regulatory changes and set the example when it comes to requiring equal treatment for all qualified borrowers. But some of the most important federal laws and regulations aren’t brand new–they’ve been around for quite some time. Some have been further modified to make them more inclusive. The Fair Housing Act now includes language that protects people regardless of their gender identity, family status, sexual orientation and much more. FHA loan rules | more...

July 13, 2015

What You Should Know About FHA Loan Appraisal Fees

By Joe Wallace

Based on the reader questions we get in our comments section, there can be some confusion over the nature of FHA appraisals, appraisal fees, and compliance inspections. The appraisal process is an important part of the overall experience of buying a home with an FHA mortgage loan; borrowers should budget for appraisal fees and anticipate needing to pay for a compliance inspection (just in case). The appraisal process can include a required compliance inspection should the appraiser note conditions that must be corrected as a condition of loan approval. The compliance inspection requires a separate fee and when it’s time to budget for the appraisal process the borrower should assume the compliance inspection might be required. The amount of the appraisal fee and compliance inspection fee will vary depending | more...

July 10, 2015

FHA Loans and Counseling Services: The Rules

By Joe Wallace

There are some cases where a borrower may seek out housing counseling on their own, and others where the applicant is required to do so as a condition of FHA loan approval. FHA foreclosure avoidance programs may require housing counseling, HECM loans definitely require the applicants to get required counseling sessions, and borrowers may choose a pre-purchase counselor based on a referral from the FHA/HUD. In some cases, such as with foreclosure avoidance, the counseling is free. In other cases there may be fees associated with the sessions that the borrower is expected to pay for. In such cases, the FHA loan program has rules that dictate how the counseling is to be carried out, how the billing is to be done, and what services the borrower must get from | more...

July 10, 2015

HUD Announces Final Rule On Fair Housing

By Joe Wallace

The FHA/HUD official site has announced a final rule that will promote and clarify fair housing requirements. A press release titled, “HUD Announces Final Rule On Affirmatively Furthering Fair Housing” announces both new procedures and simplified fair housing rules. According to the press release, the new final rule will “equip communities that receive HUD funding with data and tools to help them meet long-standing fair housing obligations in their use of HUD funds. HUD will also provide additional guidance and technical assistance to facilitate local decision-making on fair housing priorities and goals for affordable housing and community development.” For many decades, the communities that receive funding from the Department of Housing and Urban Development are required to observe fair housing rules so that all eligible applicants can receive help getting | more...

June 29, 2015

FHA & HUD On The Recent Supreme Court Fair Housing Decision

By Joe Wallace

There has rightfully been a great deal of attention on last Friday’s ruling by the Supreme Court on marriage equality. But last week’s Supreme Court actions also included other important decisions, one of which affects those seeking a place to live and the right to do so under the Fair Housing Act. On Thursday, June 25 2015, the FHA and HUD official site was updated to include a press statement from HUD about the court’s decision in a Texas housing discrimination case: “Today, the U.S. Supreme Court reaffirmed an important legal principle in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project, Inc. The Justices found that the Fair Housing Act not only prohibits intentional acts of discrimination, but also housing practices that have an unjustified discriminatory | more...