Articles Tagged With: Credit Requirements

June 7, 2011

FHA Reverse Mortgage Loan Counseling Rules

FHA Reverse Mortgages, also known as Home Equity Conversion Mortgages, have unique requirements because of the nature of the loan. HECM loans, which are intended for seniors age 62 and older, require no mortgage payments during the lifetime of the loan. HECM loans are paid off when the borrower dies or chooses to sell the property secured with the reverse mortgage. FHA rules state all HECM applicants must receive counseling to insure they are informed borrowers, fully aware of the responsibilities and requirements of a HECM loan as well as the benefits. This counseling must happen before the borrower commits to a reverse mortgage. According to Section 255(d) of the National Housing Act and FHA regulations found in 24 CFR 206.41, “all prospective Home Equity Conversion Mortgages (HECM) borrowers must | more...

June 3, 2011

The FHA Loan Application and Personal Debt

By Joe Wallace

When applying for an FHA home loan, the borrower is asked to list a variety of personal information including details about open lines of credit, car payments, any previous or current mortgages and other important details. All this data is used by the lender to establish how much debt the borrower has, how adding an FHA mortgage commitment might affect the ability for the borrower to pay, and how much money is coming in versus how much is owed. Good lenders know that debts and income are always changing–they are not fixed or constant. People pay off bills, credit cards and other obligations. They also open up new lines of credit, take on additional debt and increase their levels of financial responsibility. That’s one reason why credit experts advise FHA | more...

June 3, 2011

FHA Loans and Extensions of the Conditional Commitment

By Joe Wallace

As stated elsewhere in this blog, the appraisal process is one of the most important parts of the FHA home loan process. A borrower (and the lender) learns about the general state of the property and its fair market value thanks to the FHA appraisal, and once that process has been completed the FHA loan process can move forward and a buyer can offer a commitment to purchase the property. Due to the ever-changing nature of the housing market, FHA appraisals have an expiration date–the appraisal is not good indefinitely. What happens if for some reason the buyer delays in committing to the purchase of the home, or otherwise runs the risk of having the deal close after the appraisal has expired? Does the buyer have to pay for a | more...

June 2, 2011

FHA Loans: How Do I File A Complaint About Closing or Settlement Issues?

By Joe Wallace

FHA loans have a variety of rules and regulations about closing and settlement of FHA insured mortgages. Borrowers are protected under the Real Estate Settlement Procedures Act against fraud and shady business practices including kickbacks, artificially inflated fees and costs, and other problems. Thanks to state and federal laws, it’s more difficult than ever to take advantage of an FHA loan applicant or inflate the costs associated with an FHA home loan.

June 1, 2011

FHA Announces Green Refinancing Program for Multi-Family Buildings

By Joe Wallace

According to an FHA press release, “Approximately every 10-to-15 years, owners of existing multifamily affordable properties typically refinance their mortgages.” The release goes on to say that those who purchased older buildings may find it difficult to get approved for “additional financing to maintain or improve the physical condition of their properties, including making energy-efficient upgrades.” That’s where the FHA’s new program comes in. U.S. Housing and Urban Development Secretary Shaun Donovan has announced Green Refinance Plus, a joint program offered between the Federal Housing Administration (FHA) and Fannie Mae. Green Refinance Plus allow owners of “existing affordable rental housing properties to refinance into new mortgages that include funding for energy- and water-saving upgrades, along with other needed property renovations.” In the press release, HUD Secretary Shaun Donovan was quoted | more...

May 31, 2011

What Disaster Relief is Available For FHA Borrowers?

By Joe Wallace

Recent headlines all across America have told of floods, tornadoes and other natural disasters, all of which affect FHA borrowers, their homes and their mortgages. When an area is declared a major disaster area by the President of the United States, FHA borrowers should know there are programs that can help them in the wake of the disaster, provide help and forbearance on FHA loans, and even temporarily stop foreclosure proceedings. FHA officials urge borrowers to contact the FHA and the lender as soon as possible in the wake of a disaster as there are many steps that need to be taken in order to get help, advice and work on repairing a home damaged in the disaster area. But even before those calls are made, the FHA has begun | more...

May 30, 2011

FHA Loans: Minimum Property Requirements

By Joe Wallace

First-time applicants for an FHA mortgage learn soon learn about the FHA’s list of minimum property requirements, which any property bought with an FHA insured loan must live up to in order to get loan approval. The FHA has three guiding principles that inform its list of minimum property requirements, defined by what some appraisers call “the three S’s” which include safety, soundness and security. An FHA appraiser will come to inspect the property a borrower wants to buy, looking at the home to make sure it meets the FHA standards in each of these three areas. When it comes to safety, the FHA tells its appraisers, “Deficiencies or a lack of functioning components of plumbing, electrical or heating and cooling systems may create hazards that could be considered health | more...

May 27, 2011

Can I Assume an FHA Loan?

By Joe Wallace

There was a recent question in the comments section of this blog about FHA loan assumptions, so we thought it would be a good time to review the basics. Assumption of an FHA loan is a process where, according to the FHA official site, “the responsibility of the mortgage is acquired by another person through either Simple or Creditworthiness process.” This means that a potential borrower could take over the FHA mortgage of another borrower, but in some cases the process varies depending on when the FHA insured loan was originated. The “Simple” assumption process is only for FHA loans originated before December 1, 1986. Loans after that date may also be assumed, but the FHA requires a “creditworthiness assumption process”. Simple assumptions allow the borrower and lender to agree | more...

May 26, 2011

FHA Loans And Your Credit–What Is The Lender Looking For?

By Joe Wallace

In our last blog post, we discussed FHA loans and credit history. Many people are afraid to apply for a home loan because of past credit mistakes, but it’s easy to assume the worst about credit reporting, your history with credit, and what an FHA approved lender is looking for when reviewing an FHA loan application. In some cases, those assumptions also apply to a lack of credit history. An FHA lender must investigate the applicant’s credit reports. A few late credit card payments or other minor issues in the past aren’t enough to condemn the borrower or have an application rejected. The FHA rules don’t have a chart for counting credit issues and a cut-off number for how many late payments are too many. Instead, the FHA rules state, | more...

May 26, 2011

FHA Loans and Your Credit History

By Joe Wallace

A home loan is a major investment. Many borrowers are nervous about the credit qualifying portion of an FHA home loan application because they’ve made mistakes in the past with credit, have collection judgements in their record or have experienced bankruptcy. Those who have been through foreclosure sometimes assume they can never get their credit rating repaired enough to qualify for a home loan. But in many cases such fears are not warranted–at least where FHA loans are concerned. Conventional loans are more difficult to get in the wake of housing market woes, a bad economy and other factors, but borrowers trying for an FHA mortgage soon learn there are more options available than one might assume. According to the FHA rules, getting access to those options means having a | more...