Articles Tagged With: FHA Appraisals

December 19, 2012

FHA Loans, Scams, and Standard Procedures

In today’s world, protecting your identity, personal information, credit card numbers and Social Security data is crucial. There are plenty of warnings of identity fraud scams across all types of business, but lending and credit are especially vulnerable areas. Borrowers should always take steps to protect themselves against scammers; beware of third parties who contact you requesting your personal data by phone, e-mail, or even in person. All that said, there are some standard operating procedures borrowers should be prepared for that are NOT attempts to harvest your personal data. The key to knowing which is which–a scam versus a legitimate business transaction–is often how and when these procedures occur. For example, FHA loan rules state that a lender may need or require something called a “blanket authorization” in order | more...

December 17, 2012

FHA Loan Question: Minimum Property Requirements and “Old Wiring”

By Joe Wallace

A reader asks, “I’m looking to purchase a home though a loan from FHA. The home is old but only occupied by a single family, very nice condition in and out, but has old 100 amp wiring and has a old heating system. No problems with either. Will this affect the process of the purchase?” Questions like these are common, and before we answer it’s important to point out that the FHA itself does not lend money. It guarantees the home loan which is issued by a private lender. We only mention this because some reader questions are worded in such a way that it seems there may be a mistaken impression that FHA actually offers the loan money–it does not. With respect to this reader question, FHA loan rules | more...

December 4, 2012

HUD Charges Minnesota Condo Association With Discriminatory Policies

By Joe Wallace

There are plenty of options for those seeking FHA home loans who don’t want a home in the suburbs. Some want a condo unit, and while these types of loans can be a bit more complex due to certain requirements (FHA loan rules require condos to be on or added to a list of FHA approved projects) these types of loans are definitely available to qualified FHA loan applicants. Lenders prepare borrowers for the additional steps required in the condo loan process. What the borrower should not expect? Discrimination of any kind in that process. According to a recent press release on the HUD official site, “The U.S. Department of Housing and Urban Development (HUD) announced today that it is charging the homeowner association and property managers for an Edina, | more...

December 3, 2012

FHA Loan Rules For Multiple Residences: A Reader Question

By Joe Wallace

A reader asks, “Any person individually or jointly owning a home covered by an FHA- insured mortgage in which ownership is maintained may not purchase another principal residence with FHA insurance, except in certain situations as described in HUD 4155.1 4.B.2.d.” “What are the exemptions? FHA loan rules, as published in HUD 4155.1 Chapter Four, Section B, state: “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower. FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be insured will be the only one owned using FHA mortgage insurance.” There are | more...

November 20, 2012

FHA Issues Mortgagee Letter, Sets Policy For Federal Disaster Areas

By Joe Wallace

Whenever a natural disaster strikes and a federal disaster area is declared in the affected zone, the FHA and HUD have issued guidance about foreclosure moratoriums, assistance for those trying to recover from the disaster and other details. These announcements are usually issued as Mortgagee Letters and come out on an as-needed basis. But now the FHA has codified its position on federally declared disaster areas in general, thanks to the new FHA/HUD Mortgagee Letter, 12-23, “Guidance for FHA-Approved Mortgagees Originating and Servicing Mortgages in Presidentially-Declared Major Disaster Areas”. According to the announcement, “This Mortgagee Letter (“ML”) provides general guidance to FHA-approved mortgagees with loans in any Presidentially-Declared Major Disaster Areas (“Disaster Areas”). Further specific guidance for individual disasters may be communicated as necessary.” This general guidance includes, “A moratorium | more...

November 19, 2012

Minimum Property Requirements: FHA Loan Reader Questions

By Joe Wallace

A reader asks, “I have an appraisal prepared by FHA approved appraiser. This is a short sale and appraiser has made comment that carpet in master bedroom has been removed and has bare concrete floors.” “Yet does not pose a health hazard. She has done the appraisal “As Is” but stated floor covering is required. Question is does FHA accept the floor to be painted with a sealer. Borrower does not want to put carpet in until the property is in their name. Seller will not do anything as it is a short sale. Thanks.” FHA mortgagee letters have in the past indicated that “exposed sub-flooring” or missing carpet can be grounds for issuing a correction. In this question the reader states that the missing carpet does not pose a | more...

November 15, 2012

FHA Refinance Loans: A Reader Question

By Joe Wallace

A reader asks, “I am trying to refinance my house but have had no luck. I have been employed with the same company for several years.” “My credit score is low, During the time period from 2007-2009 I was laid off twice. The only debt we have is our mortgage and what is associated with the house. Can I qualify through FHA for a refinance?” The reader’s question includes a mention of low credit scores. Low credit scores can definitely affect a borrower’s ability to borrow, depending on circumstances, the actual FICO score number and other factors. While some refinance loans are intended to assist a borrower and help reduce monthly payments, interest rates, or both, the credit score issue can be a factor. But it’s not safe to assume | more...

November 7, 2012

FHA Loan Rules For Flood and Hazard Insurance

By Joe Wallace

In the wake of Hurricane Sandy, it seems like a good time to review a recent FHA Mortgagee Letter which addresses issues regarding hazard and flood insurance payments. While not all FHA borrowers may be affected by either storm damage or the rules in this FHA mortgagee letter, those that are affected should know the latest FHA guidance. FHA mortgagee letter 2012-19, titled “Hazard and Flood Insurance Requirement Reminder” reminds lenders about the Department of Housing and Urban Development’s “existing servicing procedures as they pertain to releasing hazard insurance proceeds for damaged properties securing Federal Housing Administration (FHA) insured mortgage loans.” According to the letter, the FHA “standard mortgage document” requires that the mortgagee–the lender–is named as a “Loss Payee” on the hazard insurance policy issued in connection with an | more...

November 7, 2012

FHA Loan Reader Questions: Credit Rating Issues

By Joe Wallace

A reader asks, “My husband and I have been trying to get approved for a home loan since august and keep getting denied. His credit is OK but my score is in the high 5s. I believe we have more than enough income to afford a house but dint know what else to do. Please help with some information on how we can get approved or how.” Questions like these have tough answers for some borrowers because the answer is basically that a credit score in the “high fives”, which we interpret to mean a FICO score in the high 500 range, isn’t good enough for many lenders in the current lending climate. While FHA does have more lenient FICO score minimums, many lenders don’t observe those bare minimums. The | more...

November 6, 2012

FHA Short Refinance Program Enhancements

By Joe Wallace

Earlier in 2012, the FHA announced some changes to its FHA Short Refinance program, which was originally announced in 2010 in a Mortgagee Letter titled ” FHA Refinance of Borrowers in Negative Equity Positions”. This program, also known as the FHA Short Refinance, is designed to allow “responsible homeowners with negative equity an opportunity to refinance their homes. These enhancements were designed to maintain homeownership by providing borrowers with conventional loans, who owe more on their mortgage than the value of their home, opportunities to refinance into an affordable FHA loan.” “This opportunity allows only non-FHA insured loans to qualify for an FHA refinance loan provided that the lender or investor writes off the unpaid principal balance of the original first lien mortgage by at least 10 percent.” The changes | more...