Articles Tagged With: FHA Foreclosure

April 25, 2013

FHA Loans and Non-Traditional Credit

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 18, 2013

FHA Loan Forbearance and Refinance Relief: Hurricane Sandy and Beyond

By Joe Wallace

Recently the FHA modified its guidelines to lenders for borrowers struggling to recover in federally declared disaster zones such as the large areas affected by Hurricane Sandy. There are two very important aspects of this policy modification that borrowers should know–before, during, and after natural disaster. According to FHA Mortgagee Letter 2013-11, “FHA is expanding forbearance relief for affected borrowers. Under this policy: Borrowers may suspend up to 12 months’ worth of mortgage payments while they repair their homes; and After the forbearance period, borrowers may be eligible for an FHA streamlined loan modification to avoid large lump sum payments. Up to 285,922 borrowers in the Sandy-affected areas who were eligible for forbearance relief as of February 28, 2013, may be eligible for an FHA streamlined modification.” The Streamlined loan | more...

March 5, 2013

FHA Loans and Refinance Loans: Interest Rates and Fees

By Joe Wallace

What do you, the borrower, need to know about FHA loan fees for new purchase mortgage loans and home loan refinances? It’s a big issue, but there are some basics to understand as you’re planning your next move in the search for a new home or a refinance loan rate. First, the FHA does not set interest rates on refinance loans or mortgage loans. It does require them to be appropriate, reasonable and customary for the market, but the job of negotiating interest rates is one the borrower and lender work on together. The FHA loan rulebook says as much in Chapter One of HUD 4155.1: “Under all currently active FHA single family mortgage insurance programs, the borrower and the lender negotiate the interest rate and any discount points.” Another | more...

February 19, 2013

The New FHA MIP Rules

By Joe Wallace

We’ve written more than one blog post recently on the changes to the FHA mortgage insurance policy. Because of the potential for confusion over these changes, we’re attempting to explain these changes one important detail at a time. When the FHA announced its changes and made them official, it issued a mortgagee letter which includes the following information: “For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute. For all mortgages regardless of their amortization terms, any mortgage involving an original principal obligation (excluding financed Up-Front MIP (UFMIP)) less than or equal to 90 percent LTV, the annual MIP will be assessed until the end of the mortgage term or for the first 11 | more...

February 7, 2013

FHA Loan Reader Questions: FHA Loans After a Foreclosure

By Joe Wallace

A reader asks, “I had a bankruptcy discharged in 2009. My mortgage was part of this bankruptcy however the bank did not foreclose until 2012. I am employed and have an average credit score of 678. Would I qualify for a FHA loan on a new property?” This is a tricky question because it includes both a bankruptcy AND a foreclosure. In such cases it’s best to contact the FHA directly for advice. Does the borrower’s two situations–bankruptcy and foreclosure–have any special consideration? There are different possibilities depending on the type of bankruptcy (not mentioned in the reader question), but let’s examine the FHA rules for the borrower’s more recent foreclosure issue. Can a borrower apply for an FHA mortgage in 2013 if there was a foreclosure action in 2012? | more...

January 28, 2013

FHA Loan Reader Questions: First Time Home Buyers and Down Payments

By Joe Wallace

A reader asks, “Is it true the first time buyer with an FHA Loan can purchase the home with no money down?” The FHA loan program is similar in some ways to another government-backed loan program–VA loans. VA guaranteed loans are for eligible veterans and feature a no-down payment option unique to that program. FHA home loans, which are also government guaranteed mortgage loans issued by a private lender, do not feature a no downpayment option. According to FHA home loan rules as described in Chapter Two of HUD 4155.1, says the following about down payments on FHA loans in a section titled Maximum Mortgage Amount For A Purchase: “The maximum mortgage amount that FHA will insure on a purchase is calculated by multiplying the appropriate loan-to-value (LTV) factor by | more...

November 30, 2012

FHA Foreclosure Protection, Home Loans and Refinancing For West Virginia Storm Victims

By Joe Wallace

The FHA and HUD have issued yet another Hurricane Sandy press release, this time announcing assistance for home owners in West Virginia affected by Hurricane Sandy. According to HUDNo.12-181, U.S. Housing and Urban Development Secretary Shaun Donovan has announced that FHA/HUD will “speed federal disaster assistance to the State of West Virginia in addition to resources being provided by FEMA and other federal partners. HUD will provide support to homeowners and low-income renters forced from their homes due to Hurricane Sandy.” On Wednesday November 28, 2012, President Obama issued a disaster declaration for the following West Virginia counties: Barbour, Boone, Braxton, Clay, Fayette, Kanawha, Lewis, Nicholas, Pendleton, Pocahontas, Preston, Raleigh, Randolph, Taylor, Tucker, Upshur, Webster, and Wyoming. This federal disaster zone declaration allows HUD to offer foreclosure relief and other | more...

November 21, 2012

FHA Amends Loss Mitigation Policies

By Joe Wallace

The FHA has announced important changes to its Loss Mitigation Home Retention options, intended as stated in FHA Mortgagee Letter 2012-22, to “reduce the number of full claims against the FHA Mutual Mortgage Insurance Fund by assisting a greater number of qualified, distressed mortgagors in retaining their homes.” The new rules, posted on November 16, have specific requirements for the lender. “No later than 90 days after issuance of this Mortgagee Letter, mortgagees must begin to assess mortgagors in default under FHA’s loss mitigation priority order and policies referenced herein.” The new FHA loan rules alter FHA’s Home Affordable Modification Program’s (FHA-HAMP) guidelines, as well as “the definition of “Special Forbearance” in Mortgagee Letter 2002-17; and Loss Mitigation priority order guidelines in Mortgagee Letter 2000-05.” What are these changes? We | more...

November 16, 2012

FHA Loan Refinancing: Subordinate Liens

By Joe Wallace

A reader asks, “My husband and I have a FHA mortgage. We have had the mortgage since 2005. A couple of year ago I lost my job and we got behind.” “FHA gave us a 2nd mortgage with no interest and we only had to pay it off when we paid off the loan. I am not sure if it was called a modification.” “Our rate is 6.50%. We have been only 1 x 30 since then and we are current now. Do you think a streamline would work for us and if so would FHA subordinate the 2nd as it is?” It’s impossible to comment on whether a loan “works” for an individual as so much about home loan refinancing depends on individual circumstances, but the subordinate lien question | 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...