Articles Tagged With: Fair Housing Act

September 24, 2012

FHA Condo Project Approval Guidelines Change: Homeowners Association Rules

We’ve reported many new changes to the FHA condo approval process that allows a condominium project to be considered for an FHA loan for individual units. Condo projects must be FHA approved before a borrower can apply for an FHA guaranteed mortgage on a unit in that condo project; that means a project’s compliance with FHA loan rules is very important. For example, a condo project may not be approved for an FHA mortgage loan if there are restrictions on the borrower’s ability to freely sell the property. The FHA has gone back and forth on an issue related to “the right of first refusal” which limits a borrower’s ability to sell. Condo loan applicants have reported problems with the right of first refusal clause, getting turned down for FHA | more...

September 21, 2012

FHA Rules and Transparency In Lending

By Joe Wallace

From time to time, we publish information about the FHA and HUD efforts to combat discrimination in housing. We don’t have new cases to report at this time, but some borrowers often wonder how FHA loan rules are designed to help prevent discrimination in a procedural way. It’s one thing to rely on existing or newly passed federal laws that forbid discriminatory practices in lending, housing, or home sales. It’s quite another to create rules and regulations that specifically work to prevent such illegal practices in the procedures of lending money. In some cases these anti-discrimination rules are more or less labeled and described as such; in others there are layers of subtlety involved, but it’s easy to see how they could be interpreted as an anti-bias requirement. A good | more...

September 19, 2012

FHA Loan Rule Changes For Condominium Project Approval: Investor Ownership Guidelines

By Joe Wallace

The FHA and HUD recently updated condo project approval guidelines in the Mortgagee Letter 2012-18. The mortgagee letter states, “It was determined that certain policy adjustments were needed to address current housing market conditions”. The letter adds, “This ML is effective for all condominium project approvals,recertifications, annexations or reconsiderations submitted for review as of the date of this directive unless otherwise specified in a particular information block. This approval process will apply until August 31, 2014, unless further extended by FHA.” Part of the revised guidelines for condo project approval? Investor ownership rules. Under the section title, “Investor Ownership Section 2.1.4” you’ll find the following: “The requirements of Section 2.1.4, Investor Ownership are replaced by the following updated policy guidance. A unit that is occupied as a principal residence is | more...

September 18, 2012

FHA Issues Revised Condo Project Approval Guidelines For Non-Residential Use

By Joe Wallace

The FHA and HUD have issued revised condo project approval guidelines for a number of areas, including the rules governing non-residential use of condo project floor space. According to Mortgagee Letter 2012-18, “This Mortgagee Letter (ML) puts in place temporary condominium project approval guideline changes to some of the current FHA condominium approval policy provisions.” The letter also says, “These changes replace, for the period specified by this ML, certain approval requirements specifically identified in this ML that were established in ML 11-22 and the attached Condominium Project Approval and Processing Guide (Guide). It was determined that certain policy adjustments were needed to address current housing market conditions.” (Emphasis ours.) A section of the mortgagee letter addresses the FHA rule on non-residential use and/or commercial use of condo space in | more...

September 14, 2012

FHA Loan Reader Question: FHA Loan Approval

By Joe Wallace

A reader asks, “How long does it take a lender to let you know if you qualify for the FHA loan?” The answer to this question varies greatly depending on the lender. There are many factors that can play a part in the processing time for an FHA mortgage including the lender’s backlog of work waiting to be processed and other issues. But there is an FHA loan rule that states the lender does have a time limit to take action on your loan application. There is a 30 day time limit–the lender must act on your application within 30 days and inform you of that action. That’s not necessarily a mandate to have your loan approved in 30 days, and there are caveats to the 30 day rule which | more...

September 13, 2012

FHA Loan Reader Questions: Credit Scores

By Joe Wallace

A reader asks, “I don’t have an FHA loan and can’t get a loan. I’m on a fixed income and need HUD assistance due to hurricane Issac damage. Who can I get assistance from? My credit is poor but I can pay mortgage. I am a single parent and don’t know where to turn. We need a home desperately! The one we are in now is not healthy and

September 12, 2012

Can an FHA Lender Enforce Special Requirements For Borrowers On Maternity Leave?

By Joe Wallace

The FHA and HUD issue press releases about enforcement activity related to the Fair Housing Act, which addresses issues and questions such as the one in our headline, “Can an FHA Lender Enforce Special Requirements For Borrowers On Maternity Leave?” To answer that question, let’s look at a boilerplate statement found in almost every FHA/HUD release about anti-discrimination cases. “The Fair Housing Act

September 11, 2012

FHA Loan Minimum FICO Score: A Reader Question

By Joe Wallace

A reader asks, “What is the lowest starting credit score?” This is a difficult question for some borrowers because the answer isn’t as straightforward as quoting the FHA loan rules. Individual lenders don’t have to require a standard identical to the minimum–they are free to require higher scores. For example, in a 2010 press release titled, “FHA Announces Policy Changes to Address Risk and Strengthen Finances ” the FHA and HUD announced a change for minimum FICO scores required in order to be approved for an FHA guaranteed home loan. The press release stated FHA and HUD planned to: “Update the combination of FICO scores and down payments for new borrowers. New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% | more...

September 11, 2012

FHA Loan Reader Questions: Foreclosure Seasoning Periods

By Joe Wallace

A reader asks, “Apparently 2 years ago a home that we sold out-right and even received cash back had a foreclosure initiated. We are in the process of trying to buy a home at this time. Our credit report looks great score of 650 to 720. We were told we were pre-approved. the day before we were suppose to close we got a call saying we were denied because there was an embedded code the underwriter found stating that a foreclosure had been initiated.” “We were told that according to FHA guidelines, you must wait 3 years after a foreclosure. Is this true? Although it didn

September 10, 2012

FHA Loan Reader Questions: Is A Physician Statement Required as Proof of Income for Disability Compensation?

By Joe Wallace

A reader asks, “I have been approved for an FHA home loan or so my loan officer told me. She said everything was good I had been approved, a closing date was selected and ten minutes later I get a text message from my loan officer that the underwriter requires one more document.” “I am on Social Security Disability, proof of all income was provided, but now the underwriter wants a letter from my doctor guaranteeing that my medical condition will not change for the next 3 years! No doctor can guarantee my health or anyone else’s, can the lender suddenly deny my loan? My doctor would look at me like I had totally lost my mind. Please help me with this.” Situations like this happen more often than you | more...