Articles in Category: HUD Regulations

September 6, 2011

How To Buy a HUD Home Part Two

In our last blog post we discussed HUD homes and who can buy them. A HUD home is a one-to-four unit residential property which was originally purchased with an FHA mortgage. The loan went into default and foreclosure, and became the property of the Department of Housing and Urban Development. To cut its’ losses, HUD offers these homes for sale at a discount. According to the FHA official site, “HUD Homes are sold ‘as-is,’ without warranty. That means that HUD will not pay to correct any problems. But even if a HUD Home needs fixing up – and not all of them do – it can be a real bargain…” FHA adds, “HUD’s asking price on the home will reflect the fact that the buyer will have to invest money | more...

August 26, 2011

FHA Borrowers Beware: Fraudsters Targeting Homeowners In Trouble

By Joe Wallace

FHA and conventional borrowers in California and elsewhere have been targeted by alleged scam artists claiming to help borrowers avoid foreclosure by adding their names to lawsuits (for a fee) against financial institutions. According to an August 19, 2011 L.A. Times article by E. Scott Reckard, the California Attorney General is pursuing actions against a group of Southern California lawyers and their associates for such activities. The action stems from situations where homeowners were allegedly tricked into paying up to $10 thousand each to be included as plaintiffs in lawsuits. According to legal paperwork filed in Los Angeles County Superior Court, “Consumers are led to believe that joining these lawsuits will stay foreclosures, reduce their loan balances, entitle them to monetary benefits and potentially get them their homes free and | more...

August 12, 2011

FHA Loans and Your Rights as a Borrower

By Joe Wallace

Predatory lending and real estate scams are common no matter what the economy is doing; when markets are unpredictable and the economic picture isn’t as optimistic as usual, scam artists tend to come out of the woodwork. How can house hunters protect themselves from scams and schemes? Sometimes the first step is knowing some of the basics. When it comes to applying for an FHA home loan, borrowers have rights which should be understood long before the search for a new home begins. Knowing your rights is a way to protect yourself from a range of things from simple high-pressure tactics that aren’t in your best interest, to outright fraud. The FHA official site emphatically states, “ATTENTION BORROWER! This may be the largest and most important loan you get during | more...

August 10, 2011

“Special” Property Requirements For FHA Loans

By Joe Wallace

Many of the most frequently asked questions about FHA home loans involve issues related to property requirements. Some borrowers are told by the lender or appraiser that a particular condition must be fixed before the loan can be approved. The borrower sometimes wishes to dispute such requirements, asking where in the FHA rules it specifically states that “condition X” must be addressed in order for the loan to proceed. But not every situation a borrower is likely to encounter is specifically addressed by a line in the FHA rulebook. What some don’t understand is that the FHA does not anticipate every housing issue with a rule addressing that condition. Instead, the FHA rules are designed to defer to local building codes, plus state or local laws where applicable. That’s not | more...

August 4, 2011

FHA Loan Options for HUD Homes

By Joe Wallace

A HUD home is defined by the FHA as “a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage.” When a home owner with an FHA mortgage loses the property because of loan default and foreclosure proceedings, the Department of Housing and Urban Development takes ownership and puts the house back on the market. According to the official site, HUD homes are sold as-is and have no warranty. There are two basic types of HUD homes available. One is considered “insurable” which means they meet the FHA’s minimum property requirements and would theoretically be eligible to be purchased with an FHA home loan. The other type is classified as “uninsurable” which means the property does not live up to FHA MPRs. | more...

August 1, 2011

FHA Takes Action Against Hundreds of Lenders

By Joe Wallace

Elsewhere in this blog, we’ve written about the emphasis FHA/HUD places on consumer protection, the importance of the Fair Housing Act, and the FHA’s approach when it comes to protecting the customer. While it’s true that sometimes the customer is the first line of defense against discriminatory and otherwise illegal practices, the FHA doesn’t simply wait for consumers to lodge complaints. A good example of this is the August 1, 2011 press release issued by the FHA about its actions against 240 FHA-approved lenders. The FHA has something called the Mortgagee Review Board which scrutinizes FHA lenders; the most recent outcome of that scrutiny includes “hundreds of administrative actions against FHA-approved lenders who failed to meet its requirements” according to the press release. The Mortgagee Review Board, or MRB for | more...

July 12, 2011

Fidelity National Financial to Pay 4.5 Million in RESPA Kickback Settlement

By Joe Wallace

FHA borrowers come to the bargaining table with a set of consumer protections on their side in the form of the Real Estate Settlement Procedures Act, or RESPA for short. One of those protections is a policy that lenders may not get any financial compensation for referring business to third parties such as home warranties, insurance, etc. This rule prevents a conflict of interest in the real estate industry; RESPA laws are designed to keep buyers from being steered towards goods and services based on hidden relationships between lenders and third parties. HUD recently issued a press release announcing a settlement involving Fidelity National Financial, which was found to have engaged in illegal kickbacks and referral payments. The press release says Fidelity National Financial, “engaged in a widespread and years-long | more...

July 1, 2011

HUD Announces New Disclosure Notice Requirements For Military Borrowers

By Joe Wallace

There are many situations which might make an FHA insured loan attractive to a military borrower who chooses not to use or cannot currently use their VA home loan benefit. Some military members purchased a home with an FHA loan before joining the military; others may choose FHA loan options based on personal preference or because they cannot use VA loan eligibility at the time of purchase. No matter what the reasons for choosing an FHA home loan, conventional mortgage, or VA insured loan, service members have some extra protection in many cases from foreclosure proceedings thanks to the Servicemembers Civil Relief Act (SCRA). Military members on active duty in wartime can get mortgage help, lower interest rates, and foreclosure protection as described in the act by notifying creditors in | more...

June 29, 2011

FHA Loans And Appraisal Repair Requirements

By Joe Wallace

When a home is appraised by an FHA appraiser, there may be

June 10, 2011

FHA Advice On Home Loans and Lenders

By Joe Wallace

FHA home loans are designed to be pro-consumer. While they don’t penalize a lender in any way, FHA loan rules do restrict the types and amount of fees, charges and other costs associated with borrowing. The mission of the FHA is to be fair to all parties, borrower and lender alike. The borrower doesn’t pay inflated fees, and the lender gets a loan guarantee from the government. The FHA offers referrals for housing counselors and advice to house hunters exploring their options under the FHA loan program. The FHA official site has plenty of sound advice for people trying to navigate the complexities of buying a home, getting the best price, and other aspects of becoming a home owner. A lot of it seems fairly obvious to experienced borrowers, but | more...