Articles Tagged With: Borrower’s Rights

September 6, 2013

FHA Loan Rules on Second Loans: A Reader Question

A reader asks, “I am a co-borrower on another FHA loan. Do I not have the right to acquire a FHA loan where I would be the primary borrower and the secondary residence would be my primary residence? I was informed I could not have or be on two FHA loans by my tentative mortgage company.” FHA loan rules covering issues like these are found in HUD 4155.1, Chapter Four Section B. It states, “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower.” “FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the | more...

September 5, 2013

FHA Loan Down Payment Assistance? A Reader Question

By Joe Wallace

A reader asks, “Are there any active down payment assistance programs out there for people who have been approved for a FHA loan. Every one of (the ones I’ve seen so far) are saying the program is no longer available.” According to the FHA/HUD official site, “HUD has no direct grant programs for down payment or closing cost assistance. However, HUD does provide funding to state and local governments for this purpose.” Some borrowers, depending on where they live, may be able to apply for down payment assistance via state or local programs. Down payment help is not guaranteed–your state or local programs may not be available or may have expired depending on the nature of those programs. Such down payment assistance program vary from place to place. You can | more...

What you should know about FHA 203(h) Loans For Disaster Victims

September 5, 2013

FHA Loan Credit Score Issues: A Reader Question

By Joe Wallace

A reader asks, “My husband and I are working on improving our credit, but still have low scores, mine being in the 530s and his in the 640s. Although we’re working on improving it, we aren’t to our ideal score yet…Does anyone have suggestions on lenders that will work with lower credit scores AND a lower down payment? (~5% based on the houses we’ve looked at so far).” Borrowers who find themselves in situations like these should do one very important thing before going any farther–contact the FHA directly by calling 1-800 CALL FHA and ask for a referral to an FHA-approved housing counselor. FHA approved housing counselors can offer advice and suggestions for improving creditworthiness before filling out an FHA loan application, and give advice on how to best | more...

September 4, 2013

FHA Loans, Bankruptcy, and Back To Work

By Joe Wallace

A reader asks, “I heard it is no longer required to wait three (3) years after a foreclosure before getting an FHA loan, true? Three years will be October 2014 but I’d rather not wait that long, we’d like to get a house July 2014. I am still in Chapter 13 bankruptcy scheduled to be over December 2014.” “I have been on my job two years, make plenty of money, and have been on time with my chapter 13 payments. I have a credit score of 650 and building. I’ll have about 10% down. Do you think it would be possible to get an FHA loan in July 2014 (3 months before the 3 year mark)?” In the past several weeks, we’ve written about the new FHA program called Back | more...

August 30, 2013

FHA Loan Short Sale Eligibility Rules

By Joe Wallace

We get many questions about borrowers who want to apply for an FHA loan in the wake of a short sale. What do FHA loan rules, as described in HUD 4155.1, say about applying for an FHA mortgage after a short sale? Much depends on whether your previous loan was current or delinquent when the short sale occurred. Borrowers who were current on all mortgage payments at the time of the short sale may find a lender willing to work with them based on HUD 4155.1 Chapter Four Section C, which states: “A borrower is considered eligible for a new FHA-insured mortgage if, from the date of loan application for the new mortgage, all • mortgage payments on the prior mortgage were made within the month due for the 12-month | more...

August 29, 2013

HUD Brings Housing Discrimination Charges Against Fifth Third Bank, Fifth Third Mortgage Company and Cranbrook Mortgage Corporation

By Joe Wallace

The FHA/HUD official site has issued a press release announcing charges against Fifth Third Bank, Fifth Third Mortgage Company and Cranbrook Mortgage Corporation. According to HUDNo.13-128, “The U.S. Department of Housing and Urban Development (HUD) announced today that it is charging Fifth Third Bank, Fifth Third Mortgage Company and Cranbrook Mortgage Corporation with discriminating against a couple with disabilities who were attempting to refinance their home mortgage. HUD’s charge alleges that the Cincinnati, Ohio-based mortgage lender and the Clinton Township, Michigan-based mortgage broker required unnecessary medical documentation in order to qualify the couple for a Federal Housing Administration (FHA) loan.” Fair Housing Act laws forbid discrimination in the home loan process or loan modification process, “based on disability, race, color, religion, national origin, sex, or family status, including imposing different application or | more...

August 27, 2013

FHA Loan Reader Questions: Spouse Credit Issues

By Joe Wallace

A reader asks, “My husband and I are looking to apply for an FHA loan. We just recently got married. He is more than qualified to apply on his own, with a good credit score and great income. I, unfortunately, have terrible credit and unresolved debts (prior to marriage). Is it possible for him to apply on his own without factoring in my debt? Our loan agent told us that I had have my credit checked and my debt would also be factored into the debt to income ratio, but not my income. Is this true?” The answer to this question is fairly simple–it depends on the laws of your state. The first thing a borrower in this situation should do is check to see if they are living in | more...

August 26, 2013

Back To Work: The FHA’s New Program Requires Housing Counseling

By Joe Wallace

The FHA has a new program called Back To Work, designed to help borrowers who have experienced what the FHA terms an Economic Event that resulted in negative credit information but may not necessarily be an accurate indicator of a borrower’s creditworthiness or ability to repay the FHA mortgage. Back To Work, according to FHA Mortgagee Letter 2013-26, lets lenders evaluate these Economic Events to see if the borrower may still be a good credit risk for an FHA loan. “FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage. To that end, FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that: certain credit | more...

August 23, 2013

Back to Work: How the new FHA Loan Guidelines Apply to Foreclosures and Short Sales

By Joe Wallace

In recent blog posts we’ve explored a new FHA program called Back To Work, which allows lenders to be more lenient with credit requirements for borrowers who have experienced what the FHA terms an Economic Event. Borrowers who have a qualifying Economic Event under Back To Work may be able to get an FHA mortgage in spite of negative credit data that lender determines does not realistically affect the borrower’s ability to afford mortgage payments on the FHA loan. The FHA’s Back to Work program rules are described in FHA Mortgagee Letter 2013-26, which states, “FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that: certain credit impairments were the result of a Loss of Employment or a significant loss of Household | more...

August 20, 2013

New FHA Loan Guidelines For “Back to Work”

By Joe Wallace

The FHA recently issued a mortgagee letter detailing new guidelines for lenders working with borrowers who have had financial setbacks that might not indicate their ability to make monthly mortgage payments or other financial obligations. According to FHA/HUD Mortgagee Letter 2013-26, “FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances.” The letter continues, “As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre-foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts. Because of these recent recession-related periods of financial difficulty, borrowers’ credit has been negatively | more...