Articles Tagged With: FHA Energy Efficient Mortgage

November 15, 2012

FHA Refinance Loans: A Reader Question

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 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...

November 2, 2012

FHA/HUD Announce Post-Hurricane Sandy Assistance For Connecticut

By Joe Wallace

A press release issued by the FHA/HUD announces help for FHA borrowers and others in Connecticut affected by Hurricane Sandy. According to HUDNo.12-168, “U.S. Housing and Urban Development Secretary Shaun Donovan today announced HUD will speed federal disaster assistance to the State of Connecticut and provide support to homeowners and low-income renters forced from their homes due to Hurricane Sandy.” The release adds that the President has announced federal disaster areas in Fairfield, Middlesex, New Haven and New London Counties, as well as Mashantucket Pequot Indian Reservation. According to the press release, “The President

November 1, 2012

What is the FHA Minimum Credit Score: A Reader Question About FHA Loans

By Joe Wallace

A reader asks, “What is the minimum credit rating score needed to be considered for an FHA loan?” This question comes up very frequently, and the answer is always a two-parter. For starters, borrowers should understand the FHA’s minimum FICO credit score requirements. These requirements are described on the FHA official site as follows: For FHA loans with case numbers “assigned on or after 10/04/10”, FHA loan rules state: When the decision credit score is:

October 31, 2012

FHA Energy Efficient Mortgages: Is Escrow Required?

By Joe Wallace

When learning abo0ut FHA home loans, escrow is one issue some borrowers have questions about. The FHA frequently asked questions pages include the following about escrow, which is governed by something called the Real Estate Settlement Procedures Act or RESPA: “Does RESPA require borrowers to maintain an escrow account? NO. It is the lender’s decision whether the borrower must maintain an escrow account for the purpose of paying taxes and other items. The HUD regulations only limit the maximum amount that a lender can require a borrower to maintain in an account.” That Q&A from the FHA official site seems to indicate that the FHA does not require escrow; indeed, it is the lender’s choice to require escrow or not. But are there situations where an escrow account may actually | more...

October 26, 2012

Are You Eligible For an FHA Mortgage?

By Joe Wallace

FHA loans are sometimes misunderstood–some people think FHA mortgages are only for low-income families, others wrongly assume only first-time home buyers can qualify for an FHA loan. The FHA does provide a list of guidelines that list who is eligible–and who is not–to apply for an FHA mortgage or refinance. The FHA loan rules include guidelines on credit scores and minimum age–which we discuss below. The rulebook that describes these things is called HUD 4155.1. In this guideline you’ll find the following: “FHA insures mortgages made to individuals with valid Social Security numbers (SSN), and under the conditions described in this section, to state and local government agencies, and approved nonprofit organizations. Note: Employees of the World Bank, foreign embassies, etc., may not be required to have an SSN. Conclusive | more...

October 25, 2012

FHA Loan Reader Question: What Does “Endorsed” Mean?

By Joe Wallace

A reader asks, “Can you please explain what “endorsed” means? I started my FHA streamline refi process March 11, 2009 through Countrywide. In the meantime BoA purchased Countrywide and the refi wasn’t finalized until June 29, 2009. Its not my fault the process took so long, and I sincerely hope I am not losing out on a refi or decrease PMI because of their delays!” This reader question most likely refers to FHA mortgagee letter HUDNo.12-045, which includes the following information about FHA Streamline Refinancing: “…Acting Federal Housing (FHA) Commissioner Carol Galante announced significant price cuts to FHA

October 24, 2012

FHA Loan Eligibility

By Joe Wallace

When a borrower applies for an FHA guaranteed mortgage, the lender is required to determine whether the borrower is a good risk by examining credit rating, the applicant’s debt-to-income ratio, and employment. But the lender also has some other checking to do. FHA loan rules state, “To determine whether a borrower is eligible to participate in an FHA mortgage loan transaction or must be rejected, the lender must: examine HUD’s LDP list, the GSA List and CAIVRS, and document the reviews on the HUD-92900-LT, FHA Loan Underwriting and Transmittal Summary.” What do all those abbreviations mean? “LDP” stands for “Limited Denial of Participation”. GSA is short for “U.S. General Services Administration List of Parties Excluded from Federal Procurement or Non-procurement Programs”. The acronym “CAVIRS” refers to “HUD’s Credit Alert Interactive | more...

October 23, 2012

FHA Loan Reader Questions: Bankruptcy and Foreclosure

By Joe Wallace

A reader asks, “My bankruptcy has been discharged for 3 years but the house has not been foreclosed on yet. Can I get an FHA loan?” There are several unanswered questions here that don’t allow a definitive answer. The nature of the bankruptcy (Chapter 7 or Chapter 14) plays a part in the answer. Is the house in foreclosure now? More information is needed to provide a clear answer. In general, FHA loan rules do require a “seasoning period” for bankruptcy and foreclosure. A home that is currently in foreclosure will likely interfere with a borrower’s attempts to get a new home loan of any kind. A home purchased with a government-backed loan that has been foreclosed upon may result in the borrower being indebted to the government. VA loans, | more...

October 18, 2012

Rules For Credit Reports Associated With FHA Loan Applications

By Joe Wallace

Some FHA loan applicants may consider the credit check something of a mystery. Borrowers should know and understand how the FHA loan application process works–including the credit check–as it can help better prepare the borrower for the preparation needed to get an FHA loan approved. What does the lender need–and get–from the credit check process? Many lenders rely on something known in the industry as the “three repository merged credit report” or TRMCR to gather the borrower’s credit information. According to FHA loan rules, this report must contain information on all credit inquiries made within the last 90 days, any credit and legal data “not considered obsolete under the Fair Credit Reporting Act (FCRA)” which may include the last seven years worth of information about bankruptcy, court judgments, lawsuits, tax | more...