Articles Tagged With: FHA Counseling

August 27, 2013

FHA Loan Reader Questions: Spouse Credit Issues

A reader asks, “My husband and I are looking to apply for an FHA loan. We just recently got married. He is more than qualified to apply on his own, with a good credit score and great income. I, unfortunately, have terrible credit and unresolved debts (prior to marriage). Is it possible for him to apply on his own without factoring in my debt? Our loan agent told us that I had have my credit checked and my debt would also be factored into the debt to income ratio, but not my income. Is this true?” The answer to this question is fairly simple–it depends on the laws of your state. The first thing a borrower in this situation should do is check to see if they are living in | more...

August 23, 2013

Back to Work: How the new FHA Loan Guidelines Apply to Foreclosures and Short Sales

By Joe Wallace

In recent blog posts we’ve explored a new FHA program called Back To Work, which allows lenders to be more lenient with credit requirements for borrowers who have experienced what the FHA terms an Economic Event. Borrowers who have a qualifying Economic Event under Back To Work may be able to get an FHA mortgage in spite of negative credit data that lender determines does not realistically affect the borrower’s ability to afford mortgage payments on the FHA loan. The FHA’s Back to Work program rules are described in FHA Mortgagee Letter 2013-26, which states, “FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can document that: certain credit impairments were the result of a Loss of Employment or a significant loss of Household | more...

August 19, 2013

FHA Revises Loan Policies For Credit Issues Related to Unemployment, Economic Hardship

By Joe Wallace

The FHA has issued a new mortgagee letter which revises its policies related to credit evaluation for FHA loan approval. FHA Mortgagee Letter 2013-26 says the FHA is committed to helping borrowers who need FHA mortgage loans who may have financial difficulty due to reduced or terminated employment, bankruptcy, and other financial difficulties. “FHA is continuing its commitment to fully evaluate borrowers who have experienced periods of financial difficulty due to extenuating circumstances. As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost their homes to a pre- foreclosure sale, deed-in-lieu, or foreclosure. Some borrowers were forced to file for bankruptcy to discharge or restructure their debts.” Mortgagee Letter 2013-26 continues | more...

August 2, 2013

FHA Loan Reader Questions: Does My FICO Score Qualify Me For An FHA Mortgage?

By Joe Wallace

A reader asks, “My credit score is 595 would I qualify to get an FHA loan?” This question comes up quite often. Technically speaking, FHA standards for borrowers with FICO scores between 500 and 579 allow the lender to approve a loan for 90% of the maximum financing limit on that transaction–that means FHA standards would require a 10% down payment. Borrowers with FICO scores below 500 are NOT eligible for FHA loans according to the FHA official site. But one thing that’s very important to remember about FHA loan standards for FICO scores is that A) your credit scores are NOT the only criteria used for loan approval and B) the lender is free to require higher FICO standards. Borrowers may be hard pressed to find a lender willing | more...

July 31, 2013

FHA Loan Answers: Alimony and Child Support as Verifiable Income

By Joe Wallace

FHA loan rules say that a borrower’s income must be verified in order for it to count when the lender makes debt-to-income ratio calculations necessary for approving (or denying) the mortgage loan. Verifiable income is defined basically as earnings that are stable, reliable, and likely to continue. A borrower’s full or even part-time employment would count in most cases. But the money a borrower makes, for example, by selling items on eBay, would likely not pass the “stable” or “likely to continue” requirements. When it comes to non-job “income” such as child support or alimony payments, FHA loan rules make provisions that allow this income to be counted under the right conditions. A borrower does not have to declare child support income under the Fair Housing Act, but it is | more...

July 3, 2013

FHA Loans: Broker and Agent Fees

By Joe Wallace

As with many other aspects of the FHA home loan process, there are rules and regulations that cover broker and real estate agent fees. Those rules are spelled out in Chapter Five of HUD 4155.1. In a section titled “Settlement Requirements Needed To Close” we find detailed rules on how such fees can be issued and paid. For example, FHA loan rules require real estate broker fees to be included in the HUD-1 settlement statement. The specific rule says, “If a borrower is represented by a real estate broker and must pay any fee directly to the broker, that expense must • be included in the total of the borrower’s settlement requirements, and • appear on the HUD-1 Settlement Statement.” The rules are different when the seller is paying a | more...

July 3, 2013

FHA Loan Reader Questions: FHA Rules on “Flipping”

By Joe Wallace

A reader asks, “Hello, can you help us with a couple of questions please. What does the FHA consider as a “Flip-it” property? How many days does this involve from an original sale of a property?” “Flipping” is defined by the FHA as the sale of a home purchased with an FHA loan within 90 days of the original sale. Under normal circumstances the FHA has anti-flipping rules in place that forbid this practice with homes purchased with an FHA-insured mortgage. But the FHA issued a waiver to these rules back in January 2010. It has since been extended more than once and the current waiver of FHA anti-flipping rules doesn’t expire until 2014. According to a November 2012 edition of The Federal Register, “FHA is extending the availability of | more...

June 28, 2013

FHA/HUD Announce Relief For Alaska Flood Victims

By Joe Wallace

The FHA and HUD have issued a press release announcing relief for victims of recent flooding in Alaska. According to HUDNo.13-100, released Thursday June 27, 2013, “U.S. Housing and Urban Development Secretary Shaun Donovan today announced HUD will speed federal disaster assistance to the State of Alaska and provide support to homeowners and low-income renters forced from their homes due to recent flooding.” This assistance came after the President made an announcement declaring parts of Alaska affected by the flooding to be federal disaster areas. According to the press release, “President Obama issued a disaster declaration for Alaska Gateway Regional Educational Attendance Area, Copper River Regional Educational Attendance Area, Lower Yukon Regional Educational Attendance Area, Yukon Flats Regional Educational Attendance Area and Yukon Koyukuk Regional Educational Attendance Area.” The federal | more...

June 17, 2013

FHA Loan Occupancy Rules

By Joe Wallace

We answer many reader questions about FHA loans, FHA loan rules, and what it takes to qualify for an FHA insured mortgage. Did you know there is an occupancy requirement for all new purchase single family FHA mortgage loans? FHA loans for single-family purchases do have an occupancy requirement, which does not permit the borrower to buy the home then turn around and rent out the property to someone else. According to the FHA loan rules found in HUD 4155.1, the home MUST be used as the principal residence or primary address. “A principal residence is a property that will be occupied by the borrower for the majority of the calendar year. At least one borrower must occupy the property and sign the security instrument and the mortgage note in | more...

June 14, 2013

HUD Updates Good Neighbor Next Door Policy

By Joe Wallace

The Department of Housing and Urban Development has updated its policy on the Good Neighbor Next Door program, which offers homes at a major discount to qualifying borrowers. According to HUD, the program “offers HUD owned single family (one-unit) homes to eligible participants at a 50% discount” to “law enforcement officers, teachers and firefighters/emergency medical technicians and who meet all other requirements of the program”. The HUD Good Neighbor Next Door program is available to those who want to purchase using an FHA insured mortgage. Recently the FHA and HUD have issued guidance about the Good Neighbor Next Door Program, which includes clarification on the mortgage insurance premium for the loan. According to FHA Mortgagee Letter 2013-20, “The purpose of this Mortgagee Letter is to: Clarify that the mortgage insurance | more...