Articles in Category: HUD Regulations

February 16, 2012

Historic Settlement Between Federal Government and Five Major Banks

The Department of Housing and Urban Development recently announced a $25 billion settlement between the government and the five largest banks in the U.S. United States Attorney General Eric Holder, Department of Housing and Urban Development (HUD) Secretary Shaun Donovan, Iowa Attorney General Tom Miller and Colorado Attorney General John W. Suthers announced the “landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses.” According to the press release, this is the largest federal-state civil settlement ever obtained and is the result of “extensive investigations by federal agencies, including the Department of Justice, HUD and the HUD Office of the Inspector General (HUD-OIG), and state attorneys general and state banking regulators across the country.” The settlement includes Bank of America Corporation, | more...

February 7, 2012

FHA Loan Standards: Exceptions to the Rules?

By Joe Wallace

The FHA has standards for qualifying for an FHA insured mortgage including income, employment, credit score and other factors. In most cases, borrowers who don’t meet the minimum required credit score or debt-to-income rations can’t qualify for an FHA loan. But are there exceptions? For example, could a borrower who has a debt-to-income ratio that’s too high still get an FHA loan approved? And why would the FHA approve a loan when the applicant doesn’t meet FHA loan standards? FHA loans include an option for lenders to review any “compensating factors” the borrower might bring to the bargaining table. For example, one such factor has to do with the borrower’s ability to pay–and a history of being able to pay–even though the debt-to-income ratio might exceed FHA standards. According to | more...

February 7, 2012

Can Repair Costs Be Added to the FHA Loan Amount?

By Joe Wallace

The FHA has strict rules about how a loan may be calculated. There’s the minimum cash investment required of the borrower, there are FHA loan limits, and there are rules covering what kinds of incentives a seller may provide in the form of interest rate buydowns and other financial contributions. Did you know that in some cases, the cost of home repairs on a sale property can be included in the sale price of the home for FHA loan purposes? According to Chapter Two of HUD4155.1, “Repairs and improvements may be added to the sales price before calculating the mortgage amount when…the repairs and improvements are required by the appraiser as essential for property eligibility”. These costs must be paid by the borrower, and

February 1, 2012

FHA Announces New Fair Housing Rules

By Joe Wallace

Nearly 30 percent of same-sex couples were treated differently when trying to buy or rent a home. That figure was published in a 2007 report by Michigan’s Fair Housing Centers. FHA and HUD have announced new regulations designed to end that sort of discrimination and much more. According to HUDNo.12-014, new regulations have been implemented to “ensure that HUD’s core housing programs are open to all eligible persons, regardless of sexual orientation or gender identity” according to the press release.

December 23, 2011

Reader Question: FHA Loan Down Payment Rules By State

By Joe Wallace

A recent reader left a message in our comments section asking, “If u live in Minnesota what the requirements for down payments on FHA loan?” Some FHA loan applicants may have the mistaken impression that FHA rules for down payments vary from state to state, so we thought it important to dispel that notion once and for all. FHA loan rules state there is a minimum down payment of 3.5%. According to the FHA official site (on the Let FHA Loans Help You page), “Your down payment can be as low as 3.5% of the purchase price, and most of your closing costs and fees can be included in the loan. Available on 1-4 unit properties.” However, FHA loan applicants should know there may be additional factors that affect the | more...

December 21, 2011

FHA Refunds–How Do I Find Out If I’m Owed Money?

By Joe Wallace

One of the frequently asked questions at FHA.gov involves FHA loan refunds for mortgage insurance premiums. This continues to be an issue for the FHA, and according to FHA.gov the agency has increased its efforts to find home owners who are due refunds. The FHA has hired a third party agency called Immediate System Resources to assist in the search for those who are due an FHA mortgage insurance premium refund. According to the FHA, “This will save people the ‘finders fees’ normally collected by third party tracers. If someone from Immediate System Resources, Inc. contacts you, they are officially affiliated with HUD and will help you and won’t charge you to get your refund.” The “tracer companies” mentioned in the quote above contact home owners with offers to help | more...

December 16, 2011

FHA Appraisals–Do They Guarantee The Condition of the Home?

By Joe Wallace

One of the most commonly asked questions about FHA loans concerns appraisals and inspections. What’s the difference between the two? An appraisal is a mandatory part of the FHA loan process. Without an appraisal, there can be no FHA home loan because there’s no way to establish the fair market value of the property in the eyes of the FHA. In some rare cases an appraisal may not be required because a previous FHA appraisal has not expired yet, but borrowers should expect and budget for an appraisal in most cases. The FHA appraisal is not a comprehensive, top-to-bottom review of a home to discover any/all defects or issues with the home. The FHA appraisal does not guarantee the home is free from defects or other problems. An FHA appraiser | more...

December 13, 2011

FHA Loans, Military Applicants, and Occupancy Rules

By Joe Wallace

There are many reasons why a military member could choose to apply for an FHA insured home loan instead of applying for a VA mortgage. Those reasons may include occupancy issues, personal choice when considering FHA loan fee structures versus VA insured mortgage fees, etc. The decision to purchase a home with an FHA mortgage instead of a VA loan could be influenced in part by language in the HUD document 4155.1, Mortgage Credit Analysis for Mortgage Insurance, which addresses occupancy issues. According to the VA official site Frequently Asked Questions list, occupancy rules for a VA Home Loan include a requirement that the veteran or spouse occupy the property bought with a VA insured loan as the primary residence: “Q: I am a single veteran stationed overseas and want | more...

November 25, 2011

HUD Rules Proposed To Refine Fair Housing Laws

By Joe Wallace

Those applying for FHA home loans for the first time soon learn about the wide range of federal laws enacted to insure fair treatment in the lending and housing markets. But according to Department of Housing and Urban Development Secretary Shaun Donovan, those laws need to be modified to be more inclusive. In Donovan’s official HUD blog, he writes, “…I

November 17, 2011

HUD Clarifies Disaster Relief Rules To Avoid Duplication of Benefits

By Joe Wallace

Earlier this year, we posted on the assistance available to FHA borrowers in the wake of natural disasters in order to avoid FHA loan default, begin the repair and recovery process and deal with insurance claims. On November 17, the FHA and HUD have issued new clarification guidance for disaster recovery benefits. According to HUD press release No. 11-271, the new rules are designed to “ease the burden of complying with federal law prohibiting so-called