Articles in Category: HUD Regulations

November 5, 2014

FHA Loans and Social Security Numbers: A Reader Question

A reader asks, “I live in a community state property. My husband does not have a social security number to run his credit. How can I proceed with a FHA loan without being able to run a credit report on my husband?” FHA loan rules are very specific when it comes to the identity and documentation requirements for all parties to be obligated on an FHA home loan. According to HUD 4155.1 Chapter One, Section B, the following applies: “All borrowers, including United States (U.S.) citizens, must have a valid Social Security Number (SSN) and must provide evidence of that SSN to the lender. The lender is responsible for • documenting an SSN for each borrower, coborrower, or cosigner on the mortgage • validating each SSN either through − entering | more...

October 31, 2014

FHA Loans: What Can Affect Your Loan Amount?

By Joe Wallace

One of the first questions on the minds of many borrowers is a logical one: “How much can I borrow?” There’s no single answer for this as county loan guaranty limits apply, and in general the amount of the FHA home loan is based on the sale price of the home or the appraised value, whichever is lower. When it comes to home loan refinancing, the appraised value of the property is very important. There are factors that can affect the amount of the FHA home loan for new purchases or refinance loans beyond those factors. For example, if you choose to finance allowable fees and expenses (including some discount points depending on the transaction and lender policies) your loan amount will increase. If you make a larger down payment, | more...

October 30, 2014

FHA Loans and Earnest Money: A Reader Question

By Joe Wallace

A reader asks, “I have a property listed and in escrow with an FHA buyer who was so confident that she would get the loan (the lender provided a fully approved letter, contingent on final review and appraisal), that she agreed to unconditionally release the EMD to my seller.” “Long-story-short, the buyer decided that in light of suspicions that she might not be approved in the final review, she would cancel the loan process and kill the deal. Now she wants her released EMD back and her agent claims there are FHA regulations that demand the return. I cannot find them. Do they exist? What do they say?” The reader doesn’t specify, but we assume the acronym “EMD” stands for “earnest money deposit”. With that in mind: This is a | more...

What you should know about FHA 203(h) Loans For Disaster Victims

October 29, 2014

FHA Mortgage Rate News: Rates Move Higher After Fed Announcement

By Joe Wallace

Our discussion last week of mortgage rate trends going into this week’s Fed announcement included the notion that mortgage rates might retreat into a defensive posture–defensive as in, little change (if any) in the two trading days leading into Wednesday’s scheduled announcement by the Fed. When the word came from the Fed on Wednesday, talk included the end of the Fed’s Quantitative Easing (QE) program. QE saw the government putting billions of dollars into markets in order to help stabilize the nation economically. Those investments affected mortgage rates, but when talk began of tapering off the program and eventually ending it, investor reaction was negative. Mortgage loan rates can and did move higher with more talk of the ifs and whens of the end of that program. Today following the Fed | more...

October 29, 2014

FHA Loan Rules and Seller Costs: A Reader Question

By Joe Wallace

A reader asks, “What costs will a seller incur if a buyer is using an FHA loan to purchase?” That is a difficult question to answer for a variety of reasons–state real estate law, lender requirements and FHA loan rules all have a say in the closing costs of a FHA home loan. There’s no itemized list of seller costs listed in the FHA loan rulebook, HUD 4155.1, but the FHA does make a list of certain costs and/or seller contributions to the sale that are and are not permitted. For example, the borrower is not to be charged for pest/termite inspections. The borrower can’t pay for the lender’s legal counsel, and the FHA has a set of regulations that dictate how much the seller can contribute toward the sale | more...

October 27, 2014

FHA Minimum Property Requirements: Acceptable Wells

By Joe Wallace

A reader asks, “I just inspected a home with a buried point well. Public water is not available. This type of well is common and legal in th area. Is this an acceptable well for FHA guidelines. No survey was provided so it is impossible for me to determine well location and distance from the septic.” FHA loan rules in this area tend to defer to the local authority. The FHA does not have detailed rules for wells that would cover all situations. The key to the acceptability of wells in connection with an FHA appraisal depends greatly on whether the wells are acceptable to the local authority. It’s impossible to determine the nature of an individual well mentioned in a reader question, but in general borrowers should know that | more...

October 23, 2014

This Week’s FHA Mortgage Rate Trends

By Joe Wallace

This time last week, we reported mortgage rates headed for lower territory thanks to a variety of factors including market volatility. This week, the difference was definitely noticeable, with rates holding steady or edging slightly higher, but still maintaining at-or-below 4% rates for 30-year fixed rate conventional loans (best execution). FHA rates held steady at 3.5% best execution. While FHA mortgage rates have managed to stay at 3.5% this week, how long that could number may persist? Next week is poised to be an important one for rates in the short term. Why? There are a number of reasons why conditions might lead interest rates upward, but one of the most anticipated things scheduled for next week is the Fed announcement–a regular occurrence that can and often does push rates depending on | more...

October 23, 2014

FHA Loan Interest Rates: The Rate Lock

By Joe Wallace

We write weekly, sometimes more frequently, about the state of FHA loan interest rates. We discuss trends, terminology, and the possible future of those rates. But some potential FHA borrowers are confused by terms like “locking” and “floating”. What does it mean to get an interest rate lock on an FHA mortgage loan? Let’s start by examining the basic rules of negotiating FHA rates on the loan. According to the FHA loan rulebook, HUD 4155.1, the lender and borrower are expected to come to an agreement on interest rates on the loan–the FHA does not set the rates. “Under all currently active FHA single family mortgage insurance programs, the borrower and the lender negotiate the interest rate and any discount points.” That’s found in the opening chapter of HUD 4155.1. | more...

October 20, 2014

Basic FHA Condo Loan Rules

By Joe Wallace

If you’ve never considered owning or purchasing a condo unit before, you might be surprised to learn that the FHA single-family loan program does permit the purchase of approved condo units with an FHA loan. The rules for condo loans are different than for traditional single family houses because of the shared nature of the property, so borrowers should become familiar with the FHA requirements for condo loans. To begin with, what does the FHA classify as a condo? Take a look at the image above–could these houses be classified as condos? It depends partially on the nature of the housing market. In Chicago, for example, a house split into more than one dwelling could classify as a condo project if it meets certain FHA parameters–and in Chicago, such modifications | more...

October 17, 2014

FHA Loan Modification: A Reader Question

By Joe Wallace

A reader asks, “I have an FHA loan serviced by ******. I am trying to modify my loan. The Bank told me that I was eligible for modification. I repeatedly send all the forms, that they asked me to send. After six months they told me that they could’t modify because my income was low.” “Then they asked me to submit all the paper work again. While the paper work was in review they told me that they couldn’t modify because they had dropped the mortgage insurance. Even it was under review they turn the house to a trustee for sale, and also they gave me another excuse, that the investor (name deleted) didn’t want to modify my loan. I had to file chapter 13 in order to keep the house | more...