Articles Tagged With: FHA Condo Loan

June 6, 2013

FHA Loan Rules: Contingent Liability

FHA loan rules cover a wide range of circumstances and situations. Many of these rules were written in anticipation of needs that, while not as common as some, still might be in demand many times over the course of a single fiscal year based on the sheer volume of FHA mortgage loan applications. One set of rules governs something known as “contingent liability”, which the FHA loan rulebook describes in HHUD 4155.1 Chapter Four, Section C. “A contingent liability exists when an individual is held responsible for payment of a debt if another party, jointly or severally obligated, defaults on the payment.” This sort of obligation may be known as a co-sign agreement, a co-borrower or co-obligor arrangement. FHA loans require any borrower who has a contingent liability to list | more...

June 5, 2013

FHA Loan Answers: First Time Homebuyers

By Joe Wallace

A reader asks, “I have a Chapter 7 bankruptcy a yr ago w/a score 589 and as a veteran honorable recieving SS benefit income of $735.00/month, and together with my wife, employed 5/yrs with an income is $1,920.00 a month, with a score 580. We have been renting for 5yrs without missing or late payments with the same landlord in Fla. Can we qualify as a first time home buyer?” There are two basic issues related to this reader question. The reader asks if there’s a chance to qualify “as a first time home buyer”. The FHA does not, contrary to popular belief, require applicants to be first time home buyers in order to get an FHA home loan. By the same logic, there is no benefit or preference given | more...

June 4, 2013

FHA Loan Reader Questions: Does Bankruptcy Hurt Your Chances?

By Joe Wallace

A reader asks, “We want to know, if filing bankruptcy 3 years ago will hurt our chances? We had to do that because I lost my job. But now I am on social security disability so I do have income.” “Our credit score is about 650. My husband makes 60K per year and I get 12K per year but little in savings. We have established new revolving credit within the past two years. Is this good enough to apply and get pre-approved for a home loan?” We’ve been getting a number of bankruptcy-related questions lately, and one thing we’d like to remind potential FHA borrowers in this situation is that a call to 1-800 CALL FHA (the official help line of the FHA) can answer many of these bankruptcy questions | more...

May 21, 2013

FHA Loan Reader Questions: Foreclosure and the Three-Year Waiting Period

By Joe Wallace

A reader asks, “I had a home that Foreclosed in 2009. The Sheriff Sale was completed in December 2009, however according to the FHA office the claim on my home was not closed out until a little over a year later on January 14, 2011.” “Which means that instead of being in a position for another FHA Loan in 2012 we have to wait until January 2014, which is considered to be over 4 years since the Sheriff Sale. Why would it take so long between the Sale and the actual closing of the claim on the house? Is there anything I can do other than wait until 2014?” While we can’t address why it takes so long between a foreclosure and the sheriff sale, we can address the portion | more...

May 13, 2013

FHA Energy Efficient Mortgage Rules For Streamline Refinance Loans

By Joe Wallace

The FHA Energy-Efficient Mortgage (EEM) option is available for borrowers who want to apply for additional money to be used for energy-efficient upgrades on the home being purchased or refinanced with an FHA mortgage. An FHA EEM is subject to certain rules and requirements, especially when paired with a Streamline Refinance. For example, one of the requirements of a Streamline Loan is that the borrower must get a benefit from the refinance–usually in the form of lower interest or monthly payments. But with some FHA EEMs, the payments may actually go up. Is this permitted under the rules? HUD 4155.1 spells out when those higher payments may be allowed–the guidence is found in Chapter Six, Section D. Under “Streamline Refinance Transactions with EEM” where you’ll find the following: “For a | more...

May 10, 2013

Distressed FHA Mortgages Up For Auction In June

By Joe Wallace

A press release issued by the FHA and HUD announces an auction of delinquent FHA mortgage loans in June of 2013. According to HUDNo.13-066, the move is intended as a form of relief in distressed areas and as a part of, “a broader effort to address the housing market’s shadow inventory and to target relief to areas experiencing high foreclosure activity” according to the release. The press release also adds, “This summer, HUD will sell approximately 20,000 distressed loans through its expanded Distressed Asset Stabilization Program (DASP) to increase recoveries to FHA’s Mutual Mortgage Insurance (MMI) Fund from non-performing FHA-insured loans, while contributing to stabilization and recovery in some of the nation’s communities hit hardest by the housing crisis.” The auction will proceed in a manner similar to past note | more...

April 30, 2013

FHA Loan Answers: How Long Is An FHA Loan?

By Joe Wallace

One common FHA loan question is fairly simple and straightforward; how long can an FHA loan be? In general, FHA loans are available for 15 or 30 year terms. FHA loan rules as spelled out in HUD 4155.1 state that there is a maximum loan term–one that depends on the type of transaction and other factors. “The maximum mortgage term may not exceed 30 years from the date that amortization begins. In the case of adjustable rate mortgages (ARMs), the term must be for 30 years. FHA does not require that loan terms be in five year multiples.” FHA loan rules add, “Some programs require a shorter term, including certain streamline refinances made without appraisals.” For FHA Streamline Refinances made without an appraisal, FHA loan rules state, “The streamline refinance | more...

April 25, 2013

FHA Loans and Non-Traditional Credit

By Joe Wallace

One commonly asked question about FHA mortgage loans involves the eligibility of borrowers who don’t have what are considered “traditional” credit histories. Can a borrower with little or no credit still qualify for an FHA loan? FHA loan rules do make provisions for those who have little credit history that can be researched via a typical credit bureau report. In cases like these, the lender is required to review certain types of documentation to verify the borrower is a good credit risk. According to HUD 4155.1, “In order for the underwriter to determine that a borrower has sufficient credit references to help evaluate bill paying habits, the credit history must…include three credit references” including at least one of the following: Rental housing payments (subject to independent verification if the borrower | more...

April 23, 2013

FHA Credit Report Rules

By Joe Wallace

When you apply for an FHA loan, your loan application will include forms you sign to give your loan officer permission to pull your credit reports, check your employment history and other items that are required in order to approve your VA home loan. But what are the rules for the lender when pulling your credit reports? What is the loan officer obligated to review and how is the process regulated? FHA loan rules, as printed in HUD 4155.1, give the lender a long set of instructions when it comes to accessing credit data. For starters, the lender can only accept credit report information directly from the credit agencies. It cannot come from any third party including the borrower. Additionally, HUD 4155.1 Chapter One Section Five states, “A credit report | more...

April 17, 2013

FHA Refinance Loans, Disaster Assistance, and Loan Forbearance

By Joe Wallace

The FHA has updated its disaster relief policies to help those recovering from the effects of Hurricane Sandy, but also natural disasters in a federally declared disaster area in general. One area that hasn’t gotten much attention until now is the FHA policy on refinance loans in such cases. What assistance is there for someone with an FHA insured refinance loan who is struggling in a federal disaster area? According to the new FHA mortgagee letter, 13-11, “In accordance with HUD Handbook 4155.1, Mortgage Credit Analysis for Mortgage Insurance One- to Four-Unit Mortgage Loans, for the purpose of determining the acceptability of the borrower’s payment history for any FHA refinance, when a borrower has withheld mortgage payments pursuant to either a Formal or Informal Forbearance drafted under this Mortgagee Letter, | more...