Articles Tagged With: FHA Foreclosure

July 27, 2017

How FHA Loan Modification Works

In our previous blog post, we discussed some of the basics of FHA foreclosure avoidance and loan modification. But how does FHA loan modification work? FHA HAMP, also known as the FHA Home Affordable Modification program is a way for home owners to avoid foreclosure through a permanent loan modification. But in order to become eligible for FHA HAMP, borrowers have to meet certain criteria as described on the FHA/HUD official site. Who is eligible to apply for FHA HAMP? “Mortgagors with FHA-insured mortgages that do not qualify for other loss mitigation programs and with adequate debt-to-income ratios. Homeowners must successfully complete a trial payment plan before becoming a full participant in the program.” The trial payment plan is the key to the success of the borrower’s involvement with HAMP. | more...

April 28, 2015

FHA Loan Program Changes To Help Prevent Foreclosure

By Joe Wallace

On Friday, April 24 2015, the FHA and HUD issued a press release detailing “significant changes” to the Distressed Asset Stabilization Program or DASP. According to HUDNo 15-048, “In an effort to better serve homeowners looking to avoid foreclosure, loan servicers will now be required to delay foreclosure for a year and to evaluate all borrowers for the Home Affordable Modification Program (HAMP) or a similar loss mitigation program.” “HUD is making additional improvements to the Neighborhood Stabilization Outcome (NSO) sales portion of DASP which are aimed at increasing non-profit participation. Updates include giving non-profits a first look at vacant properties, allowing purchasers to re-sell notes to non-profits, and offering a non-profit only pool.” That is a major alteration from the old standard, which permitted lenders to foreclose on a | more...

April 17, 2015

FHA Home Loans: What Is CAIVRS?

By Joe Wallace

In our last post, we answered a reader question about trouble with an FHA home loan associated with information found in the CAIVRS system. One of the important aspects of that reader question is the definition of what CAIVRS is and how data found in that system could affect an FHA mortgage loan application. The FHA official site has a Frequently Asked Questions section that addresses CAIVRS, which stands for Credit Alert Verification Reporting System. This is a system maintained by the federal government that, as the FHA official site explains, “lists persons who have defaulted or had a loan foreclosed within the last three years on a debt owed to the Federal government or are currently delinquent on a debt owed to the Federal government.” Examples of what the | more...

March 19, 2015

FHA Loan Reader Questions: New FHA Loans After Foreclosure

By Joe Wallace

A reader asks, “my husband property was forclosed on out of his control of his job moving to a different state can we try to by if we havent waited 2 years” This reader question doesn’t provide quite enough information to give a specific answer. FHA loans after a foreclosure are possible, but much depends on whether the borrower had an FHA home loan or not, and the borrower’s credit history following the foreclosure activity. Here’s what FHA loan rules in HUD 4155.1 Chapter Four Section A say about attempting to get an FHA loan after a previous home purchased with an FHA mortgage was foreclosed upon: “If the borrower has had past delinquencies or has defaulted on an FHAinsured loan, there is a three-year waiting period before he/she can | more...

December 8, 2014

FHA Loan FICO Score Mininums and Late Payments: A Reader Question

By Joe Wallace

A reader asks, “We were living in Florida when the housing market crashed. I was in school and my husband was working. 2 mos after starting school my husband lost his job so we had no other option then to file bankruptcy and we tried 9 times to get our mortgage modified with [lender name deleted] and they NEVER helped us! after eight mos of trying to get a modification, we were served foreclosure papers. Our Bankruptcy was discharged July 2010 and our Foreclosure was Dec 2010…” “My credit score is 593 and my husbands is 585. There have been a couple CC payments that have been late but other than that we managed to pay everything on time, including our rent. Will we be able to qualify for Loan…Please | more...

October 17, 2014

FHA Loan Modification: A Reader Question

By Joe Wallace

A reader asks, “I have an FHA loan serviced by ******. I am trying to modify my loan. The Bank told me that I was eligible for modification. I repeatedly send all the forms, that they asked me to send. After six months they told me that they could’t modify because my income was low.” “Then they asked me to submit all the paper work again. While the paper work was in review they told me that they couldn’t modify because they had dropped the mortgage insurance. Even it was under review they turn the house to a trustee for sale, and also they gave me another excuse, that the investor (name deleted) didn’t want to modify my loan. I had to file chapter 13 in order to keep the house | more...

January 16, 2014

FHA Loans And Energy Efficient Mortgages

By Joe Wallace

Borrowers who choose the FHA Energy Efficient Mortgage (EEM) option as part of their FHA loan can get up to $8,000 in additional funds added to the loan amount for the express purpose of adding approved energy-efficient upgrades. According to the FHA loan rules in HUD 4155.1 , Chapter Six, “Once the borrower and the property are determined eligible for FHA-insured financing, the lender, using the energy rating report and the EEM worksheet, determines the dollar amount of the cost-effective energy package that may be added to the mortgage amount. The cost of any improvement to the property that will increase the property’s energy efficiency, and that is determined to be cost effective, is eligible for financing into the mortgage.The cost that may be added to the mortgage amount is | more...

December 17, 2013

FHA Loan Reader Questions: Late Payments on Credit History

By Joe Wallace

A reader asks, “My wife and I have already completed home inspection,down payment and now must apply for FHA. We have already been officially told we qualify by score and income. I would like to know when mortgage companies look back at credit history and notice at least 3 creditor with late payments on them but I have the backing that I was in combat and wounded and not able at the time to pay it on time. I am 100% Disabled with VA award letters, can the company allow this as an acceptable excuse for not paying on time?” FHA loan rules on credit history are found in HUD 4155.1, Chapter Four Section C, which says: “Past credit performance is the most useful guide to • determining a borrower’s | more...

November 13, 2013

FHA Loans and Bankruptcy Requirements: A Reader Question

By Joe Wallace

A reader asks, “My bankruptcy was discharged December 7 2011. Prior to filing I had very good credit, but was forced to retire because of cutbacks. I currently have a Fannie Mae insured mortgage through a local bank and want to go to a small house and sell my current one. Since filing discharge my wife and I have a good credit record. When I called the bank they now tell me FHA requirement is 3 years. Previously I was told 2 years. Who is right and what can I send the bank to show them the answer.” FHA standards say different things depending on the type of bankruptcy and the circumstances surrounding it, but in any case borrowers should know that lender requirements may exceed the FHA minimums–the bank | more...

November 7, 2013

FHA Clarifies Foreclosure Rules

By Joe Wallace

The FHA has updated its loss mitigation rules for the foreclosure process. FHA Mortgagee Letter 13-40, which supersedes or overrules previous or contradictory FHA foreclosure rules, has a collection of guidance for lenders. Some of that guidance is very important for borrowers who may be facing foreclosure on FHA mortgages to understand fully. According to the publication, “Effective loss mitigation is essential to stabilizing communities affected by natural disasters, poor housing market conditions, etc. Therefore, servicers are reminded that participation in FHA’s Loss Mitigation Program is not optional, they are to inform borrowers of and evaluate them for each loss mitigation retention and non-retention option1 in a timely manner.” The clarified loss mitigation procedures include direct instructions to the lender on when and how foreclosure proceedings may take place. “Pursuant | more...