Articles Tagged With: Borrower’s Rights

March 1, 2013

FHA Loan Reader Questions: First Time Homebuyer Requirement?

A reader asks, “I’m not a first time home buyer, I have a conventional loan for a home that I’m planning to keep as a rental home. Can I qualify for a purchase FHA loan on a primary home?” One of the common misconceptions about FHA home loans is that you MUST be a first-time home buyer in order to qualify for one. This is not true. You may have state or local homebuyer assistance programs in your area that do require the applicant for that program to be a first time buyer, but FHA loans are open to all qualified applicants. The real issue in this reader question has more to do with debt-to-income ratios (DTIs)–will the FHA lender approve a buyer who already owns a home? Single-family new | more...

February 28, 2013

FHA Loan Requirements and Your Personal Data

By Joe Wallace

We sometimes get questions about certain practices required to verify and approve the information given on a borrowers FHA home loan application. Borrowers are rightly concerned about protecting their privacy and personal data; what do FHA loan rules say about lenders who ask for account numbers, Social Security information and other private information? FHA loan applicants should know that the FHA does require these types of personal data in order to properly verify and approve the loan. According to FHA loan rules as described in HUD4155.1: “The lender may ask the borrower to sign a general authorization form that gives the lender blanket authority to verify information needed to process the mortgage loan application, such as • past and present employment records • bank accounts and • stock holdings.” FHA | more...

February 27, 2013

Will Sequestration Affect FHA Home Loans?

By Joe Wallace

On March 1, 2013, unless lawmakers act to prevent the process known as sequestration, major budget cuts, furloughs and staffing changes will go into effect across a variety of government agencies. These cuts have the potential to be quite disruptive, and many wonder whether FHA home loans, refinance loans and other programs might be negatively affected. According to HUD Secretary Shaun Donovan, the answer is yes. Donovan’s February testimony before the Senate Committee on Appropriations included some revealing comments about sequestration and its impact on the FHA/HUD. “Sequestration would result in 75,000 fewer households receiving foreclosure prevention, pre-purchase, rental or other counseling though HUD housing counseling grants. This counseling is crucial for middle class and other families who have been harmed by the housing crisis from which we are still | more...

February 25, 2013

FHA Loans, Prepayments and Due-On-Sale Clauses

By Joe Wallace

When shopping for a home, some borrowers come into the house hunt with a strategy that includes paying or pre-paying a chunk of the mortgage loan up front. This isn’ necessarily a down payment per se, but it is something to consider when setting a budget for a home loan and the anticipated mortgage loan payments. Does the FHA allow such a strategy? Can borrowers pay down the loan principal? FHA home loans do feature the ability to pre-pay a portion of the loan. This can be helpful for many reasons including lowering mortgage payments and saving money over the lifetime of the loan by reducing the principal and the amount of interest paid on that principal. According to HUD 4155.2 Chapter Three, Section A, “A borrower may prepay a | more...

February 22, 2013

FHA Loan Limits For High Cost Counties: FHA Loan Questions

By Joe Wallace

Many borrowers want to know why FHA home loans are available for the same size and type of properties, but in larger or smaller amounts depending on the market. Why aren’t FHA loan amounts standardized? The basic answer to this is that all housing markets are different, and the costs in one market are not necessarily the same for another. A two-bedroom home with a garage in Bangor, Maine might not cost the same to build or finance as a similar home in Cleveland, Ohio. The same goes for properties located on either coast—how much would that two-bedroom home build and sell for in Los Angeles or New York? To address these issues, the FHA has created a table that lists the FHA loan limits for counties where the costs | more...

February 20, 2013

FHA Loans and Closing Costs–What You Should Know

By Joe Wallace

FHA loans require a minimum down payment, but those funds are not the only money needed at closing time. Borrowers should know and budget for a variety of expenses that are due on or before closing time. That’s one reason why finance experts recommend taking a year or more to prepare for any type of home loan–saving for these expenses can make things financially easier once the home buying process begins. But what are the costs and expenses a borrower will need to close the deal? Fortunately the FHA loan rulebook spells out the items needed at closing time–these must be paid for on or before the deal closes. The FHA Loan rulebook, HUD 4144.1, says, “In addition to the minimum downpayment requirement described in HUD 4155.1 5.B.1.a, additional borrower | more...

February 18, 2013

FHA Loan Questions: When Do The New FHA Mortgage Insurance Premiums Take Effect?

By Joe Wallace

A recent FHA press release announced changes to the FHA mortgage insurance policy, including higher MIP and other changes. According to the FHA official site. “FHA will increase its annual mortgage insurance premium (MIP) for most new mortgages by 10 basis points or by 0.10 percent. FHA will increase premiums on jumbo mortgages ($625,500 or larger) by 5 basis points or 0.05 percent, to the maximum authorized annual mortgage insurance premium. These premium increases exclude certain streamline refinance transactions. FHA will also require most FHA borrowers to continue paying annual premiums for the life of their mortgage loan.” Those are significant changes to the FHA loan program, but who is affected by these changes and when do they take effect? Some borrowers who already have FHA home loans are concerned | more...

February 14, 2013

FHA Proposes Down Payment Changes For Larger FHA Loans

By Joe Wallace

The FHA is considering changes to the maximum LTV and down payment rules for certain FHA mortgages (described by the FHA as those “in excess of $625,500”) according to the FHA official site. According to HUDNo.13-010, “FHA will announce a proposed increased down payment requirement for mortgages with original principal balances above $625,500. The minimum down payment for these mortgages will increase from 3.5 to 5 percent.” “This change, coupled with the statutory maximum premiums charged for these loans, will help protect FHA and further facilitate its efforts to encourage higher levels of private market participation in the housing finance market.” In a statement published in the Federal Register Volume 78, Number 25, you’ll find some supplemental information including the following: “…the maximum LTV will be limited to 95 percent | more...

February 12, 2013

New “Final Rule” On Housing Discrimination Standards

By Joe Wallace

The FHA and HUD have a new yardstick to measure housing discrimination and take appropriate action where needed, according to a recent press release issued by the Department of Housing and Urban Development. According to the press release HUDNo.13-022, HUD is “issuing a final rule to formalize the national standard for determining whether a housing practice violates the Fair Housing Act as the result of discriminatory effect.” “Through the issuance of this Rule,HUD is reaffirming its commitment to enforcing the Fair Housing Act in a consistent and uniform manner,” said HUD Secretary Shaun Donovan. “This will ensure the continued strength of one of the most important tools for exposing and ending housing discrimination.” As the press release states, HUD is “statutorily charged with the authority and responsibility for interpreting and | more...

February 6, 2013

FHA Loans After Foreclosure

By Joe Wallace

We get many reader questions in the comments section asking about how long a borrower must wait in order to be eligible for a new FHA home loan following foreclosure. We’ve answered this question many times quoting the rules and regulations found in the FHA loan rulebook, HUD 4155.1. Now the Federal Housing Commissioner, Carol Galante, has issued some guidance on the subject. While her words are directed toward “stakeholders” and not necessarily consumers in particular, she has an important message that borrowers need to be aware of when considering applying for an FHA loan in the wake of foreclosure proceedings. Galante says, “Recently, we have seen a proliferation of web-based and print advertising regarding the sup- posed ease of obtaining an FHA-insured loan following a foreclosure. Often, this advertising | more...