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Articles Tagged With: Credit Requirements

April 20, 2011

FHA Loans and Retirement Income Verification

By Joe Wallace

When applying for an FHA home loan, the borrower must list all sources of income so they can be verified as part of the loan approval process. The lender is required to check all sources of income to insure they are dependable and “likely to continue” into the future, according to the FHA official site. Income verification helps the lender accurately determine a borrower’s debt-to-income ratio; without knowing that ratio it’s impossible to issue a loan with any degree of certainty that it would actually be repaid.

 

April 19, 2011

FHA and HUD Turn Up the Heat on Mortgage Scammers

By Joe Wallace

Recent announcements by the FHA and HUD have increased the pressure on housing market scammers, but consumers should still be on the lookout for warning signs of a scam artist at work. The most recent announcement from FHA/HUD comes in Mortgagee Letter 2011-17, which revises HUD

 

April 19, 2011

New HUD Awareness Campaign Targets Foreclosure Con Artists

By Joe Wallace

FHA borrowers have a new resource to look to in order to become more educated borrowers and avoid foreclosure scams. The Department of Housing and Urban Development has announced a new awareness campaign called Know It. Avoid It. Report It. According to an April 18, 2011 HUD press release, the campaign has launched in Miami, Chicago and Los Angeles and has two missions; one to direct homeowners in financial trouble toward reputable counselors and anti-foreclosure resources, the other to get the help of homeowners to shut down scams and con artists. The HUD press release warns home owners, “Newly deceptive scam artist tactics lure homeowners into misleading agreements. Their tactics include giving the false impression that they are affiliated with the government, charging illegal up-front fees, and executing fraudulent lease-back, | more...

 

April 18, 2011

FHA Loans: Facts About the Good Faith Estimate

By Joe Wallace

The HUD GFE Good Faith Estimate is paperwork the borrower is given as part of the the FHA loan process. This is a very important document–it explains the nature of the FHA loan including potential interest rate increases, the amount of monthly mortgage payments that could increase as a result, and plenty of other data crucial to making a budget for the new mortgage and other living expenses. The form states, “This GFE gives you an estimate of your settlement charges and loan terms if you are approved for this loan. For more information, see HUD

 

April 14, 2011

FHA Loans and Counseling Agencies

By Joe Wallace

The FHA encourages borrowers preparing to apply for an FHA insured mortgage to get credit counseling and/or first time home buyer counseling where appropriate. An informed borrower is better protected in the real estate marketplace; in some cases the FHA actually requires applicants to get counseling to protect the borrower from making poor decisions about certain kinds of loan products. HECM loans/reverse mortgages are one type of FHA insured mortgage that require counseling in order to get loan approval, due in part to their unique nature compared to other types of loans. To help FHA loan applicants, the agency refers borrowers to approved counseling agencies. In an age where anyone can set up a storefont and pretend to dispense advice about credit, foreclosure avoidance and buying a home, the FHA’s | more...

 

April 12, 2011

FHA HECM Loans: Questions Seniors Should Ask

By Joe Wallace

The FHA reverse mortgage, also known as a Home Equity Conversion Mortgage or HECM loan for short, can be an important tool for many seniors. The FHA reverse mortgage is a home equity conversion loan that allows qualified borrowers age 62 and older to get a mortgage that has no monthly payments and is only payable when the borrower dies or sells the home. Like other FHA mortgages, FHA HECM loans have occupancy requirements and the borrower can only apply for a Home Equity Conversion Mortgage for the home they use as the primary residence. As with any major financial commitment, the HECM loan is not to be entered into lightly or without serious planning. That’s one reason why the FHA has mandatory counseling required as part of any HECM | more...

 

April 12, 2011

FHA Announces Settlement with First American Mortgage Trust

By Joe Wallace

On many occasions, we’ve discussed the FHA’s aggressive pro-consumer policies. When a borrower decides to apply for an FHA insured loan, there is plenty of legal protection against discriminatory lending practices. But the FHA doesn’t just look after the borrower’s interests–it also polices the industry where appropriate to insure a level playing field for all involved. The FHA has standards for fair lending, there are laws designed to promote equal access to credit for qualified borrowers, and there are also requirements to protect the FHA’s investment against lenders who are tempted not to exercise due diligence in making sure those borrowers are indeed qualified. A good example of this is the recently announced settlement between the FHA mortgagee review board and First American Mortgage Trust. According to an FHA press | more...

 

April 11, 2011

FHA Streamline Refinancing Rule Changes In Full Effect This Week

By Bruce Reichstein

In February 2011, the FHA and HUD issued an announcement about changes to the Streamline Refinancing program. Many alterations to the program were made, some effective immediately when the guidance was issued in February, other changes were designed to be implemented no later than 60 days from the date of Mortgagee Letter 2011-11, February 14th. One of the important changes in that letter affects FHA non-credit qualifying streamline refinancing. The FHA and HUD wanted to have greater risk control over the FHA insurance fund; the FHA determined stronger rules were needed to safeguard FHA streamline loans. According to the mortgagee letter, “mortgagees must not use an appraisal to increase the insurable mortgage balance beyond the sum of the outstanding principal balance and the new Up-Front Mortgage Insurance Premium.” The new | more...