Articles in Category: HUD Regulations

November 14, 2013

Looking For An FHA Loan In Another Part Of The Country? A New HUD Tool Could Help

Not everyone looking for a home with an FHA loan has the luxury of being able to drive through a lot of neighborhoods to look at all the “for sale” signs. Some are forced to look for a new home out of necessity–a job relocates to a new city, a new promotion requires a change of address, sometimes even natural disasters can urge a house hunter to look elsewhere. A lot of people feel at a disadvantage when it comes to looking for homes in a city other than their own, which is why the Department of Housing and Urban Development has created a new tool to help FHA loan applicants and anyone else looking for a home loan. According to a recent FHA/HUD press release, U.S. Housing and Urban | more...

November 7, 2013

FHA Clarifies Foreclosure Rules

By Joe Wallace

The FHA has updated its loss mitigation rules for the foreclosure process. FHA Mortgagee Letter 13-40, which supersedes or overrules previous or contradictory FHA foreclosure rules, has a collection of guidance for lenders. Some of that guidance is very important for borrowers who may be facing foreclosure on FHA mortgages to understand fully. According to the publication, “Effective loss mitigation is essential to stabilizing communities affected by natural disasters, poor housing market conditions, etc. Therefore, servicers are reminded that participation in FHA’s Loss Mitigation Program is not optional, they are to inform borrowers of and evaluate them for each loss mitigation retention and non-retention option1 in a timely manner.” The clarified loss mitigation procedures include direct instructions to the lender on when and how foreclosure proceedings may take place. “Pursuant | more...

November 6, 2013

HUD Settles Bank Of America Maternity Leave Discrimination Case

By Joe Wallace

The U.S. Department of Housing and Urban Development issued a recent press statement announcing, “Bank of America will pay $45,000 as part of Conciliation Agreements resolving allegations the lender discriminated against pregnant women seeking mortgage loans. HUD had alleged that the Bank of America refused to refinance the mortgages of two couples in California and Texas, because the women were on maternity leave.” We write a great deal of articles here about home loans, and one of the most important aspects of being an informed borrower is knowing your rights under the Fair Housing Act. As the FHA/HUD press release points out, refusing a mortgage or denying a borrower mortgage insurance because the applicant is pregnant or on family leave is a violation of the Fair Housing Act. “No lender | more...

November 5, 2013

FHA Loan Foreclosures: How Long Must a Borrower Wait To Apply Again?

By Joe Wallace

We’ve received a lot of reader questions in recent days about FHA loan eligibility issues, including queries on how long the borrower must wait after foreclosure on a previous FHA home loan before applying for a new FHA mortgage. FHA loan rules address this issue in HUD 4155.1 Chapter Four, Section A. In the section titled, “Eligibility for FHA-Insured Financing”, we find the following guidance to the lender under the subheading, “Waiting Period for Borrowers With Past Delinquencies, Defaults or Claims on FHA Loans”. It says: “If the borrower has had past delinquencies or has defaulted on an FHA- insured loan, there is a three-year waiting period before he/she can regain eligibility for another FHA-insured mortgage.” This waiting period is mandatory, though borrowers should ask their loan officer or contact | more...

October 31, 2013

FHA and HUD Update Loss Mitigation Instructions for Lenders

By Joe Wallace

Borrowers who get into financial trouble may have difficulty paying their monthly FHA mortgages. In all cases, the FHA encourages borrowers to get in touch with the lender as soon as possible to make arrangements to avoid going into delinquency and default on an FHA loan. Borrowers who do this have the most options, and find many more doors open to them. Borrowers who wait until it’s too late to prevent going into default may have few choices. What is the lender’s responsibility when a borrower starts missing payments and is in danger of foreclosure? The FHA and HUD have issued updated guidance telling lenders what must be done and what the acceptable course of action is for the financial institution in such cases. These updates were published in FHA | more...

October 29, 2013

FHA Loans and Trust Income

By Joe Wallace

FHA home loan applications require the borrower to list income and job details so that the lender can accurately determine a borrower’s debt-to-income ratio. For this purpose, FHA loan rules say that only income that is likely to continue can be used–the borrower’s wages, tips, bonuses and other earnings may be counted if they meet FHA criteria for “stable and reliable” and “likely to continue”. One source of income for some borrowers involves a trust fund–can trust income be used as verifiable income for an FHA mortgage loan? The answer is yes, but only if the trust income meets FHA loan minimum standards as described in HUD 4155.1, which includes the following guidance to lenders when reviewing trust fund income listed on a borrower’s application, found in a section called | more...

October 11, 2013

FHA Loans Are Still Available During the Government Shutdown

By Joe Wallace

The FHA and HUD are still processing FHA loan paperwork during the government shutdown. While there may be some confusion about the FHA loan program since it is run by a federal agency, borrowers and potential FHA loan applicants should know that FHA loan applications are still being accepted and processed. The FHA and HUD issued guidance about how the FHA will operate during the shutdown. A document called the HUD Contingency Plan states, “All excepted staff will be performing functions associated with multi-year or no-year credit reform financing (“x-year”) appropriations, and are necessary to administer transactions for which a commitment has been made; administering the portfolio of FHA insured loans (collecting premiums, paying claims); or fulfilling obligations associated with Housing’s project-based rental assistance programs. In addition, “excepted” employees will | more...

October 7, 2013

FHA Loans For More Than One Home: A Reader Question

By Joe Wallace

A reader asks, “I have recently split up with my girlfriend of 16 years we have never been legally married. She is not willing to refi to get my name off the house. I have not lived in the house for over a year and need to get another FHA loan on a house I am having built. I qualify financially. Is it possible for me to get another FHA loan since I no longer live in the house and the co-borrower does?” FHA loan rules discuss the guidelines for having more than one FHA loan in HUD 4155.1 Chapter Four Section B. That section says of this particular circumstance, “A borrower may be eligible for another FHA-insured mortgage if he/she is vacating a residence that will remain occupied by | more...

October 3, 2013

FHA Loan Interest Rate Locks

By Joe Wallace

In recent weeks, we’ve seen a steady drop in mortgage loan interest rates, with VA and FHA mortgage loan rates going as low as 4.0% in some cases (though that rate is not available from every lender or to every borrower). FHA mortgage loan rates tend to be lower than conventional loan rates in terms of the “ideal rate” for well qualified borrowers with very good FICO scores and credit repayment history. But even for borrowers who don’t have spotless credit, the recent mortgage loan rate recovery has offered some applicants a better deal than they could have gotten a few months ago when interest rates were climbing steadily over a period of weeks. One question some borrowers have about period like these when rates are higher in some months | more...

October 1, 2013

FHA Loans and the Government Shutdown

By Joe Wallace

The FHA and HUD have issued guidance and information as to the status of FHA loan operations during a government shutdown. At the time of this writing, the following is considered active FHA policy–in a document titled HUD Contingency Plan 2013, under the section titled, “Single Family Housing”, we find this information which applies to FHA single family home loans: “The Office of Single Family Housing will endorse new loans under current multi-year appropriation authority in order to support the health and stability of the U.S. mortgage market. (FHA endorsements currently represent 15% of the market.) Approximately 80% of FHA loans are endorsed by lenders with delegated authority. The remaining 20% are endorsed through the FHA Homeownership Centers, leveraging FHA staff with a contractor that works on-site.” Additionally, “The Office | more...