Articles Tagged With: Borrower’s Rights

April 16, 2021

Learn More About Home Loans: Appraisals & Inspections

It’s important to learn as much as you can about the home loan process when planning and saving for your new mortgage. If you are a newcomer to the home loan process, there are some good resources that can help you be more informed borrower. The less informed you are, the more likely you are to have some kind of regret at the end of the home loan process. The more you know, the more confident you will feel about your choices along the way. One important issue for many borrowers is the FHA appraisal process. Are you in-the-know about what happens during the appraisal, what it is intended to do and why you should never trust the appraisal to provide you the information that only a complete home inspection | more...

May 31, 2019

HUD Announces $1.2 Million To Fight Housing Discrimination

By Joe Wallace

The Department of Housing and Urban Development has announced $1.2 in funding toward the fight against housing discrimination. The HUD official site made the announcement on May 30, 2019. The federal funding falls under the Fair Housing Initiatives Program (FHIP) to “support the efforts of 11 organizations to educate the public and housing providers about their rights and responsibilities under the Fair Housing Act.” April, which is Fair Housing Month, saw the agency award $15 million to similar types of organizations nationwide “to conduct a range of fair housing enforcement, capacity building and education and outreach” all designed to end discrimination at all stages of the housing process. The Secretary of HUD was quoted in a press release stating,”HUD’s efforts to fight housing discrimination are force multiplied by local fair | more...

November 29, 2017

FHA Loan Rules For Loan Approval: Federal Debts and Tax Liens

By Joe Wallace

FHA loan rules for loan approval include instructions to the lender about unpaid federal debts and tax liens. Your chosen participating FHA lender is responsible for verifying your income, employment record, and your monthly financial obligations-which may include tax obligations such as a lien, or a federal debt. Unresolved taxes and federal debt can be a serious issue that will affect a home loan application. The status of such debt is one of the most important factors. According to HUD 4000.1, “Mortgagees are prohibited from processing an application for an FHA-insured Mortgage for Borrowers with delinquent federal non-tax debt, including deficiency Judgments and other debt associated with past FHA-insured Mortgages.” The FHA loan rules in this section also add that the lender is required to determine “whether the Borrower(s) have | more...

May 5, 2016

FHA Loans and FICO Scores: Fact and Fiction

By Joe Wallace

Some potential FHA borrowers have questions about FHA loan credit score requirements. It’s easy to hear part of story when it comes to other people qualifying for an FHA mortgage and assume you’ve gotten all the facts, but the reality is that FHA loan rules and credit score requirements aren’t the whole picture. Lender standards also have a say in loan approval. That is why FHA loan rules, which specify a FICO score starting at 580 (for maximum financing), don’t have the final say. Lender standards also apply, and those standards (provided they are applied in accordance with federal law) will also factor into the application process. An FHA loan fact: FICO scores below 500 are not permitted. An FHA loan fiction: Anyone with a FICO score in the mid | more...

June 10, 2014

FHA Refinance Loan Rules For Payments Before and After The New Loan

By Joe Wallace

FHA refinance loan advice includes a variety of recommendations about creditworthiness. For example, you should make sure you have 12 months of on-time payments on your credit record before you apply for a refinance loan, especially when applying for cash-out refinancing loans. But what about the timeliness of your original mortgage payments? Borrowers who have made all their payments on time and are about to refinance may wonder if, because of the timing of an FHA refinance transaction, two payments might be required in a single month. Can’t the borrower skip the final payment on the old mortgage before the new one kicks in? The rules for refinance loans found in HUD 4155.1 Chapter Three instruct the lender to make sure the borrower is current and paid up all the | more...

January 22, 2014

FHA Loan Reader Questions: Getting Behind on an FHA Mortgage

By Joe Wallace

A reader asks, “Let’s say a borrower misses a month’s payment. The next month, they have enough money for one payment, but not the two months that they owe. Can the lender tell them not to pay until they have enough money for *all* that they owe, preventing them from at least not getting further behind in their payments? This feels unethical; is it legal?” Skipping payments on an FHA loan is a bad idea in general. The reader did the right thing by contacting the lender as soon as there was a problem making the payments–borrowers should always work closely with a lender in order to avoid going into FHA loan default and foreclosure. But in situations where the borrower isn’t sure if the participating FHA lender is helping | more...

January 21, 2014

FHA and HUD Issue New Foreclosure Avoidance Brochure

By Joe Wallace

The FHA and HUD have issued a new mortgagee letter explaining the replacement of a “saving your home” brochure issued in 2002. According to FHA Mortgagee Letter 14-01, the “How to Avoid Foreclosure” brochure, HUD-PA-426, has been replaced. “The new brochure is the “Save Your Home: Tips to Avoid Foreclosure” brochure, HUD-2008-5-FHA, which is to be sent with a cover letter to delinquent mortgagors pursuant to 24 CFR 203.602.” The FHA and HUD have replaced the old document and have included the following instructions to lenders when sending the new brochure, which is designed to help inform borrowers in trouble on their FHA mortgages about the options available to them. When sending the new brochure, lenders are required to send a cover letter which includes the following “informed borrower” information: | more...

January 16, 2014

FHA Loans And Energy Efficient Mortgages

By Joe Wallace

Borrowers who choose the FHA Energy Efficient Mortgage (EEM) option as part of their FHA loan can get up to $8,000 in additional funds added to the loan amount for the express purpose of adding approved energy-efficient upgrades. According to the FHA loan rules in HUD 4155.1 , Chapter Six, “Once the borrower and the property are determined eligible for FHA-insured financing, the lender, using the energy rating report and the EEM worksheet, determines the dollar amount of the cost-effective energy package that may be added to the mortgage amount. The cost of any improvement to the property that will increase the property’s energy efficiency, and that is determined to be cost effective, is eligible for financing into the mortgage.The cost that may be added to the mortgage amount is | more...

January 15, 2014

FHA Loan Assumptions: For Qualified Borrowers

By Joe Wallace

Yesterday we discussed FHA loan assumption policies—FHA loans are assumable, provided the lender can determine that the proposed new owner is able to financially qualify for the mortgage. According to HUD 4155.1 Chapter Seven, the following applies to all FHA home loans subject to laws affecting loans closed in 1989 and after: “Under the HUD Reform Act of 1989, mortgages closed on or after December 15, 1989 require credit qualification of those borrowers wishing to assume the mortgage. The creditworthiness review requirement spans the life of the mortgage. This requirement applies to both those borrowers who • take title to a property subject to the mortgage without assuming personal liability for the debt, and • assume and agree to pay the mortgage.” FHA loan rules state that any mortgage falling | more...

January 10, 2014

FHA Loan Approval and Evictions: A Reader Question

By Joe Wallace

A reader asks, “I was ‘renting to own’ a house from a close family friend. For 3 years, I paid her mortgage payment and all household repairs/maintenance. She then decided after her parents death to move back to our home state and ultimately take her home back. I started working with a lender who said I qualified for an FHA loan…My ‘landlord’ or family friend only wanted to give me 4 weeks to move out after announcing that she changed her mind and wanted her house back, and there was no way I could do that. I ended up needing 6 weeks, but was just made aware that she filed a rule of evict w/ the local magistrate court…” “…Now my lender called me and says he can’t help me | more...