Articles Tagged With: Fair Housing Act

January 21, 2014

FHA and HUD Issue New Foreclosure Avoidance Brochure

The FHA and HUD have issued a new mortgagee letter explaining the replacement of a “saving your home” brochure issued in 2002. According to FHA Mortgagee Letter 14-01, the “How to Avoid Foreclosure” brochure, HUD-PA-426, has been replaced. “The new brochure is the “Save Your Home: Tips to Avoid Foreclosure” brochure, HUD-2008-5-FHA, which is to be sent with a cover letter to delinquent mortgagors pursuant to 24 CFR 203.602.” The FHA and HUD have replaced the old document and have included the following instructions to lenders when sending the new brochure, which is designed to help inform borrowers in trouble on their FHA mortgages about the options available to them. When sending the new brochure, lenders are required to send a cover letter which includes the following “informed borrower” information: | more...

January 10, 2014

FHA Loan Approval and Evictions: A Reader Question

By Joe Wallace

A reader asks, “I was ‘renting to own’ a house from a close family friend. For 3 years, I paid her mortgage payment and all household repairs/maintenance. She then decided after her parents death to move back to our home state and ultimately take her home back. I started working with a lender who said I qualified for an FHA loan…My ‘landlord’ or family friend only wanted to give me 4 weeks to move out after announcing that she changed her mind and wanted her house back, and there was no way I could do that. I ended up needing 6 weeks, but was just made aware that she filed a rule of evict w/ the local magistrate court…” “…Now my lender called me and says he can’t help me | more...

December 11, 2013

FHA Announces New Loan Limits

By Joe Wallace

The FHA has announced changes to FHA loan limit policy. According to HUDNo.13-184, effective at the beginning of the new year in 2013, there will be new FHA single-family loan limits that comply with the Housing and Economic Recovery Act (HERA) of 2008. FHA Commissioner Carol Galante was quoted in the press release, saying, “As the housing market continues its recovery, it is important for FHA to evaluate the role we need to play…implementing lower loan limits is an important and appropriate step as private capital returns to portions of the market and enables FHA to concentrate on those borrowers that are still underserved.” The press release says that current standard FHA loan limits “for areas where housing costs are relatively low” will remain unchanged in 2014–that limit at the | more...

December 5, 2013

FHA Loan Down Payments–Can A Family Member Loan The Money?

By Joe Wallace

We’ve been discussing FHA loan down payments quite a lot lately–there are many questions about the required 3.5% minimum down payment for new purchase FHA home loans. This down payment is known as a “minimum cash investment” and while it is definitely lower than the money down required of many conventional loans, it can still be difficult for some borrowers to pull the money together out of pocket. In such cases, the FHA does permit borrowers to apply for collateralized loans from third parties with no financial stake in the loan transaction. But some borrowers would rather turn to a family member for such a loan instead. Does the FHA, with its requirements that all down payment sources be scrutinized, allow such a loan from a family member? The answer | more...

December 4, 2013

FHA Loan Downpayment Sources: Loans

By Joe Wallace

There are many questions about the required minimum downpayment for FHA home loans. Borrowers are required to put a minimum amount (3.5%) down on the FHA loan, and the money used to make this down payment must come from what the FHA terms “approved sources”. Those sources can include the borrower’s own money from savings, investments, cashed-in stocks, and many other accounts. Why does the FHA put scrutiny on the sources of down payment money? One reason is to avoid conflicts of interest between lender and borrower–the lender cannot provide down payment funds to the borrower, for example. A borrower who cannot afford to make a down payment out-of-pocket may need to apply for a collateralized loan for some or all of the downpayment amount. FHA loan rules permit this | more...

November 21, 2013

FHA Loans and “Non-Occupying Borrowers”

By Joe Wallace

We’ve gotten a variety of questions lately about the FHA loan rules for occupancy related to buying a single-family home. FHA loan rules state that a borrower must occupy the home purchased with a single-family FHA mortgage as his/her personal residence. But what about when two or more people are obligated on the FHA home loan? Are both required to meet this occupancy rule? FHA loan rules in HUD 4155.1 state that at least one person obligated on the FHA loan must live in the home as the primary residence. In cases where not all the borrowers will do so, the loan is classified differently and there are different rules that may affect the mortgage. According to HUD 4155.1, Chapter 2 Section B, “A non-occupying borrower transaction involves two or | more...

November 7, 2013

FHA Loan Reader Questions: Buying a Home After Chapter 7

By Joe Wallace

A reader asks, “We filed Chapter 7 with a house 1 1/2 years ago. How long after bankruptcy do you have to wait I have been told 1 yr then 2 years now 3 years? I would like to buy a home again and I am trying to find out what I must do I was told by one lender that I must rent a home for one year and reapply for credit for also one year before I can apply for a mortgage is there any truth in this? Should I just try to apply for a pre-approval and see what happens and if I do will that hurt my credit score?” The basic question about applying for an FHA home loan after a Chapter 7 bankruptcy has a | more...

November 6, 2013

HUD Settles Bank Of America Maternity Leave Discrimination Case

By Joe Wallace

The U.S. Department of Housing and Urban Development issued a recent press statement announcing, “Bank of America will pay $45,000 as part of Conciliation Agreements resolving allegations the lender discriminated against pregnant women seeking mortgage loans. HUD had alleged that the Bank of America refused to refinance the mortgages of two couples in California and Texas, because the women were on maternity leave.” We write a great deal of articles here about home loans, and one of the most important aspects of being an informed borrower is knowing your rights under the Fair Housing Act. As the FHA/HUD press release points out, refusing a mortgage or denying a borrower mortgage insurance because the applicant is pregnant or on family leave is a violation of the Fair Housing Act. “No lender | more...

October 30, 2013

FHA Loans, Verifiable Income, and VA Benefits

By Joe Wallace

Some veterans and currently serving military members may choose to pursue an FHA home loan instead of a VA mortgage for any number of reasons. If a borrower is eligible for VA benefits, can he or she count those benefits as income for the purposes of qualifying for an FHA insured mortgage loan? According to the FHA loan rulebook, military pay and some benefits may be counted as verifiable income as long as it meets the right criteria. Chapter Four of HUD 4155.1 says, “Military personnel receive base pay, and are often entitled to additional forms of pay, such as • variable housing allowances • clothing allowances • flight or hazard pay • rations, and • proficiency pay. These types of additional pay are acceptable when analyzing a borrower’s income | more...

October 15, 2013

FHA Loan Answers: No Cash Out Refinancing With Appraisals

By Joe Wallace

FHA refinancing loan options include the ability to apply for a no cash-out refinancing loan with an appraisal required. For these loans, the FHA loan rules as described in Chapter Three, Section B of HUD 4155.1, addresses a variety of issues including subordinate liens, refinancing to buy out an ex-spouse’s interest in the property, etc. One issue specifically mentioned in these rules is how the lender must handle a no cash out refinancing loan for homes that have been owned for less than one year before the FHA refinancing loan application. Are FHA refinance loans possible in this case? According to Chapter Three: “If the property was acquired less than one year before the loan application, and is not already FHA-insured, the original sales price of the property must be | more...