Articles Tagged With: Credit Requirements

May 15, 2013

FHA Loan Reader Questions: Unethical Practices?

A reader asks, “I bought my home through FHA nearly 4 years ago. I now am selling and a buyer called and we agreed to sell to them. They are going with an FHA loan as well. At first they had my agent representing them. They somehow got their brother in law, who also is a real estate agent, to do the whole house inspection. He said that the stairs were wrong (10″ risers, no railing) He also stated that the roof in the garage needed to be jacked up and have more joists or whatever they are called and that he would do it.” “He isn’t a certified inspector with FHA and I don’t know if he is even a true inspector. He didn’t report it, the buyers came | more...

May 14, 2013

FHA Loans: Where Your Down Payment Comes From

By Joe Wallace

New purchase FHA home loans require a “minimum cash investment” of at least 3.5% of the appraised value of the home or the sales price, whichever is lower. But where can this down payment come from? FHA loan rules require the lender to verify the source of the down payment to insure it comes from what the FHA terms “acceptable sources”. HUD 4155.1 Chapter Five states, “Under most FHA programs, the borrower is required to make a minimum downpayment into the transaction of at least 3.5% of the lesser of the appraised value of the property or the sales price. Additionally, the borrower must have sufficient funds to cover borrower-paid closing costs and fees at the time of settlement. Funds used to cover the required minimum downpayment, as well as | more...

May 13, 2013

FHA Energy Efficient Mortgage Rules For Streamline Refinance Loans

By Joe Wallace

The FHA Energy-Efficient Mortgage (EEM) option is available for borrowers who want to apply for additional money to be used for energy-efficient upgrades on the home being purchased or refinanced with an FHA mortgage. An FHA EEM is subject to certain rules and requirements, especially when paired with a Streamline Refinance. For example, one of the requirements of a Streamline Loan is that the borrower must get a benefit from the refinance–usually in the form of lower interest or monthly payments. But with some FHA EEMs, the payments may actually go up. Is this permitted under the rules? HUD 4155.1 spells out when those higher payments may be allowed–the guidence is found in Chapter Six, Section D. Under “Streamline Refinance Transactions with EEM” where you’ll find the following: “For a | more...

May 9, 2013

HUD Settlement Reached In Housing Discrimination Cases

By Joe Wallace

The FHA and HUD have issued a press release concerning two cases of alleged housing discrimination where settlements have been reached. According to HUDNo.13-067, two conciliation agreements have been reached between the Department of Housing and Urban Development and SunTrust Mortgage Inc. “settling allegations that the Richmond, VA-based lender denied mortgage loans to a couple in Port St. Lucie, FL, and another couple in Ashland, VA, because the women were on maternity leave.” As the press release states, Fair Housing Act laws make it “unlawful to discriminate in residential real estate-related transactions based on race, color, national origin, religion, sex, disability, or familial status.” Lenders cannot, under the Fair Housing Act, deny a loan application because a person is pregnant, or deny a loan because the borrower has taken maternity | more...

May 9, 2013

FHA Loan Reader Questions: HOA Issues

By Joe Wallace

A reader asks, “The town home next door is ruined by fire in July 2012 and not repairing. Trash in carport…I have one wall connecting with that house and my roof is damaged too. I contacted the HOA (I pay $ 100 each month and they should repair roof, clean up territory, etc) but they will DO NOT make any repairs or clean-ups. Even broken sidewalk by broken unit not repaired! I contacted the City and few Code Enforcement officers show up, now is almost year gone but no repairs…I call Code Enforcement again, but they told me, ‘case in progress’ and nothing more. How I can save my house from damage from that broken unit next door – and make Association do the work and repair the roof and | more...

May 8, 2013

FHA Loan Reader Questions: Down Payments

By Joe Wallace

A reader asks, “I have applied for an FHA loan. However, the home price is over the FHA limit in our area. We have enough money to get to the maximum loan amount, but we are not clear if that will be sufficient or if we will still need an additional 3.5% on top of that?” “As an example only – Let’s say the house costs $365,000 but the maximum FHA loan amount is $330,000. If we put down 35,000 to bring the loan amount to $330,000 will we still be required to put down more money?” The answer to this question is a bit complex, but we’ll quote the FHA loan rules word-for-word for maximum clarity. According to the FHA loan rulebook, HUD 4155.1 Chapter Five Section B, “Under | more...

May 6, 2013

FHA Loan Reader Questions: Do All Homes For Sale Require an Appraisal?

By Joe Wallace

A reader asks, “Do all homes need an inspection and an appraisal? My sister-in-law is the seller and is worried (about an) older kitchen; FHA may not give me a loan. The home is in good condition and the family already did an appraisal in order to get an asking price.” There are two separate procedures asked about in this reader question–an appraisal is not the same thing as a home inspection, but both are important parts of the home buying process. A home inspection is a voluntary service the borrower can and definitely SHOULD budget for when purchasing a home with any kind of mortgage whether it is an FHA, conventional, VA loan, etc. The home inspection is a more up-close look at the condition of the property and | more...

May 3, 2013

FHA Loan Answers: Legal Age For FHA Loans?

By Joe Wallace

A reader asks, “Does one of the co-borrowers have to be enrolled in college, or can one of the applicants be a young employed adult?” FHA loan rules require borrowers to be of legal age acceptable in the laws of your state. If you are old enough to sign a legally binding contract in the eyes of the law, you are old enough to apply for an FHA home loan. That does not guarantee loan approval–the FHA requires the lender to review all borrowers and co-borrowers for creditworthiness, income, employment and credit scores. A borrower who is at the legal age in his or her state, but does not meet credit standards would not be approved for a VA home loan. Borrowers who are in college would still need to | more...

May 2, 2013

FHA Loan Reader Questions: Short Sales, Credit Scores and FHA Loans

By Joe Wallace

A reader asks, “I was in the Independent Foreclosure Review. I was put in a modification for a year made all my payments and they sold my mortgage and then sent me a letter saying I was denied. I ended up short saleing on 7/5/11. My credit score is 561, what are my chances of getting an FHA loan?” Short sales in and of themselves may not be an automatic barrier to an new FHA home loan if the borrower was current on the mortgage at the time of the sale. You may find that in cases where there was a delinquency or late payments at the time of the short sale, a borrower may be required to wait at least 12 months from the time of the last late | more...

April 29, 2013

Deadline For New FHA MIP Policy Approaches

By Joe Wallace

The deadline for a new FHA mortgage insurance premium policy is approaching; beginning on June 3, 2013 most FHA loans endorsed on or after that date will be affected by the following changes as described in FHA Mortgagee Letter 2013-04: “For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute.” That basically means that many affected FHA loans will feature annual MIP for the duration of the loan rather than cancelling the MIP after a certain point. Other FHA loans will have MIP where there was none required previously. Additionally, Mortgagee Letter 2013-04 states, “For all mortgages regardless of their amortization terms, any mortgage involving an original principal obligation (excluding financed Up-Front MIP (UFMIP)) | more...