Articles Tagged With: Borrower’s Rights

April 23, 2013

FHA Credit Report Rules

When you apply for an FHA loan, your loan application will include forms you sign to give your loan officer permission to pull your credit reports, check your employment history and other items that are required in order to approve your VA home loan. But what are the rules for the lender when pulling your credit reports? What is the loan officer obligated to review and how is the process regulated? FHA loan rules, as printed in HUD 4155.1, give the lender a long set of instructions when it comes to accessing credit data. For starters, the lender can only accept credit report information directly from the credit agencies. It cannot come from any third party including the borrower. Additionally, HUD 4155.1 Chapter One Section Five states, “A credit report | more...

April 19, 2013

FHA Loan Reader Questions: FHA Loans For Retired People

By Joe Wallace

A reader asks, “Have been trying to get my Freddie Mac loan reduced for 16 months with no good results. Can a retired person get an fha/obama loan if they have excellent credit, no debt and low income?” The answer to this question really depends on more information. The FHA itself does not have a minimum income requirement for FHA refinance loan approval. Instead, the FHA guidelines state that the borrower’s debt-to-income ratio would be a factor in some kinds of refinancing. The term “low income” itself is very relative–what might seem to be low income for some is perfectly acceptable in other cases. A borrower with good credit and a low debt-to-income ratio may be perfectly able to qualify for an FHA mortgage assuming other qualifying factors are also | more...

April 18, 2013

FHA Loan Forbearance and Refinance Relief: Hurricane Sandy and Beyond

By Joe Wallace

Recently the FHA modified its guidelines to lenders for borrowers struggling to recover in federally declared disaster zones such as the large areas affected by Hurricane Sandy. There are two very important aspects of this policy modification that borrowers should know–before, during, and after natural disaster. According to FHA Mortgagee Letter 2013-11, “FHA is expanding forbearance relief for affected borrowers. Under this policy: Borrowers may suspend up to 12 months’ worth of mortgage payments while they repair their homes; and After the forbearance period, borrowers may be eligible for an FHA streamlined loan modification to avoid large lump sum payments. Up to 285,922 borrowers in the Sandy-affected areas who were eligible for forbearance relief as of February 28, 2013, may be eligible for an FHA streamlined modification.” The Streamlined loan | more...

April 16, 2013

Coldwell Banker Settles In HUD Housing Discrimination Claim

By Joe Wallace

A press release on the FHA/HUD official site announced the recent settlement of a housing discrimination claim involving Coldwell Banker. According to HUDNo.13-051B, ” The U.S. Department of Housing and Urban Development (HUD) announced today a $90,000 Conciliation Agreement with Coldwell Banker Residential Brokerage and the seller of a home in Worcester, Massachusetts, settling allegations they violated the Fair Housing Act by preventing the sale of a house to be used as a group home for persons with disabilities.” Fair Housing Act laws forbid discrimination in both rental procedures and property sales–including discriminatory standards or requirements based on disability. In this particular case, the requirements included a housing covenant that prevented the property from being used as a group home for disabled persons. “HUD is committed to promoting housing opportunities | more...

April 15, 2013

FHA Loan Answers: FHA Loan Applications, Separation, and Divorce

By Joe Wallace

A reader asks, “I’m married, the current home is FHA loan under my husbands name only….can i buy a home for 120,000 under FHA to live in? If so, will they count my husbands debts against me getting the loan? We have agreed to live separate, stay married though, do they require legal separation?” This question doesn’t have a one-size-fits-all answer for one very important reason. FHA loan rules go hand-in-hand with state community property laws. What does this mean? If a borrower is divorced, separated, or still legally married in a community property state, each spouse may be liable for all debts incurred during the marriage. In such cases, the FHA lender may be required to include both spouses on the FHA mortgage, run credit checks, etc. on both | more...

April 10, 2013

FHA Loan Answers: Is a Credit Check Required For FHA Loan Assumptions?

By Joe Wallace

FHA loans are assumable, which means that if you buy a home with an FHA mortgage and decide to do so later down the line, you could allow someone else to assume the loan–taking over responsibility for the mortgage rather than selling the home outright. A loan assumption means that the same mortgage you applied for is transferred to a new owner rather than going through a sale of the home, payoff of the original mortgage, and issuing a new loan to the new owner. Most homes today (except for mortgages closed before December 15 1989) purchased with an FHA home loan require a credit check for the person assuming the loan. There’s no such thing as a simple “hand-to-hand” transfer of an FHA mortgage from one person to another. | more...

April 9, 2013

FHA Loan Reader Questions: Foreclosure Waiting Period

By Joe Wallace

A reader asks, “I’m in the process of obtaining a FHA Loan. I completed my Chapter 13 bankruptcy a year ago after completing five years of payments on time. My credit score is not an issue right now. All of my paperwork is in, or so I thought. My mortgage lender now tells me that I need a letter from the bankruptcy court saying that I’m allowed to get a loan.” “She says that this is a requirement of the underwriters. I think that the underwriter should only be asking for this if I was still in the bankruptcy, not now, when I’ve been cleared by the courts. What can I do?” The answers are not simple in a situation like this, and there are many details we aren’t privy | more...

April 8, 2013

FHA Loan Answers: Applying For A Loan After A Short Sale

By Joe Wallace

Home owners who need to ask about FHA loans after a short sale send us a good many of our most frequently asked questions. What do FHA loan rules say about borrowers trying to apply for a new FHA mortgage after a short sale transaction? According to HUD 4155.1 Chapter Four, “A borrower is not eligible for a new FHA-insured mortgage if he/she pursued a short sale agreement on his/her principal residence simply to • take advantage of declining market conditions, and • purchase a similar or superior property within a reasonable commuting distance at a reduced price as compared to current market value.” But that does NOT mean borrowers cannot apply for an FHA loan after a short sale–if you do not fit into the description above, and were | more...

April 4, 2013

FHA Loan Refinance Credit Rules: A Reader Question

By Joe Wallace

A reader asks, “I am trying to refinance my FHA loan with my current lender. I was refused they said, because my credit score is too low. I thought this did not matter? I thought the FHA STREAMLINE was intended for situations like ours.” “I have never been late or missed a payment in 4.5 years. My husband is doing well now and we are trying to get back to normal. Does the credit score count against you or not on the FHA streamline? And do the banks have a right to refuse the streamline if you are eligible?” There are several factors that must be considered when looking at a question like this. It’s true that FHA Streamline loans have no FHA requirement for credit underwriting which would include | more...

April 4, 2013

FHA Loan Rules For Loan Documentation

By Joe Wallace

FHA loans require paperwork. Whether it’s filled out on line, on paper, or using some combination of the two, there are several ares where borrower and lender must work together to complete. You’ll notice when filling out your FHA loan paperwork that there are requirements for certain types of information including credit history, your monthly financial obligations and much more. But did you know there are rules that govern how this information is handled by the lender? For example, one of the most important rules designed for the protection of the borrower applies to how the lender collects your signature and authorization for various steps of the FHA loan or refinance loan application process. The FHA loan rules spelled out in HUD 4155.1 state: “Lenders may not have borrowers sign | more...