Articles Tagged With: FHA Loan Regulations

January 4, 2016

FHA Home Loans, Domestic Partnerships, And Identity Of Interest Transactions

Recently a reader got in touch with us in the comments section to ask the following question about FHA loans, identity-of-interest transactions, and whether a domestic partnership could require additional consideration for assuming an FHA loan or applying to buy a home from a domestic partner: “I have lived in a residence with my boyfriend for the last 3 years. He currently owns the property and is going to be moving. I would like to stay in the residence and purchase his home from him. I have resided here rent free (on paper anyway no lease agreement). He has paid his mortgage, while I have paid all of the other household expenses (utilities, groceries, etc). Question #1: Am I considered a tenant of the property even though there is no | more...

December 24, 2015

FHA Appraisal Standards: “Ordinary” Home Purchases Versus Fixer-Uppers

By Joe Wallace

One good question that comes our way in the comments section from time to time involves the difference between an ordinary new home purchase loan or FHA mortgage and the purchase of a fixer-upper with an FHA rehab loan. If appraisal standards for FHA loans include minimum property requirements, how can a fixer-upper be purchased with an FHA mortgage? After all, the nature of a fixer-upper loan is that you take a property that is in need of rehab or repairs and bring it up to standards. How can a fixer upper pass an FHA appraisal? Fortunately, this issue is addressed in HUD 4000.1, which includes the following: “As the on-site representative for the Mortgagee, the Appraiser provides preliminary verification that a Property meets the Property Acceptability Criteria, which includes | more...

December 22, 2015

HUD 4000.1 On Verifying Military Income

By Joe Wallace

FHA loan rules in HUD 4000.1 specify a variety of requirements for verifying a loan applicant’s income. Military income is one type of earnings brought to the FHA loan process–how is the lender instructed to review this type of employment and verify the earnings? According to HUD 4000.1, the process is similar to other typical types of employment, but thanks to military benefits, allowances, and special pay some additional guidance is required for the lender, starting with a basic definition of the term “military pay”. “Military Income refers to income received by military personnel during their period of active, Reserve, or National Guard service, including: –base pay –Basic Allowance for Housing –clothing allowances –flight or hazard pay –Basic Allowance for Subsistence –proficiency pay” All of those could be used to | more...

December 21, 2015

Mortgage Rate Trends: Creeping Lower

By Joe Wallace

On Friday mortgage rates crept lower, something more than one market watcher has commented on as being a bit contradictory when you think about the idea that the Fed is raising interest rates and that the anticipation of that happening brought a lot of volatility to the markets. Investor reaction to the Fed rate hike announcement was a big “X-factor” last week in terms of which way rates could have gone after that announcement. As we’ve seen, the hike news turned out not to be a big spoiler for mortgage loan interest rates. Rates moved lower but you may notice the changes in the form of lower closing costs instead of actual alterations in the rates. 30-year fixed rate conventional mortgage loans on Friday were still begin reported, best execution, | more...

November 25, 2015

HUD Settlement With Illinois Landlord Over Lead Hazard

By Joe Wallace

The FHA/HUD official site has issued a press release announcing a settlement in a case involving lead hazards in Illinois rental properties. This may seem at first glance to have nothing to do with FHA home loans. But this case is an important reminder of why it is so important to report issues connected with fair housing, hazardous conditions in housing, and related issues–the victims in cases like these are often the only defense against continued violation of federal laws, environmental guidelines, etc. According to HUDNo. 15-151, the Department of Housing and Urban Development, “announced a settlement with a Rockford, Illinois landlord to resolve a claim he failed to inform tenants, some with young children, that their homes may contain potentially dangerous lead.” According to the press release, the agreement | more...

Can I buy a manufactured home with an FHA loan?

November 24, 2015

Get Ready For Your FHA Cash Out Refinance Loan

By Joe Wallace

When you buy a home with a conventional, FHA, or other type of home loan product, one day you may wish to refinance to take advantage of the equity you’ve built up in the home. An FHA cash-out refinance loan can help you do that. With a little planning you can make the most of your refinance experience. The first step is to figure out how much time you need to prepare for the loan. There are closing costs, and a new credit application and appraisal will be required. Saving money for the appraisal is a good idea, and if you wish to purchase discount points on your cash out loan you can pay for them up front with reduced stress on your monthly budget if you take enough time | more...

November 23, 2015

FHA Loan Minimum Property Requirements in HUD 4000.1: Water Supply, Wells

By Joe Wallace

FHA loan rules covering minimum property requirements (for all homes to be purchased with a single-family FHA loan) are found in HUD 4000.1. The topic of water supply to the home is one that frequently comes up when borrowers or soon-to-be FHA loan applicants look at homes that are serviced by wells or other “alternative” types of water supply other than a public utility. What do FHA loan rules have to say about the water supply to the home? HUD 4000.1 begins by stating: “The Mortgagee must confirm that a connection is made to a public or Community Water System whenever feasible and available at a reasonable cost. If connection costs to the public or community system are not reasonable, the existing onsite systems are acceptable, provided they are functioning | more...

November 20, 2015

FHA Minimum Property Requirements in HUD 4000.1: Remaining Economic Life Of The Home

By Joe Wallace

HUD 4000.1 has a section with guidelines concerning the minimum property standards for homes to be purchased with an FHA mortgage. There are instructions to the lender concerning issues such as encroachments, overhead power lines, safety and related issues. HUD 4000.1 has specific language that requires certain aspects of the home be functional for the life of the loan. “The Mortgagee must confirm that the Structure of the Property will be serviceable for the life of the Mortgage. The Mortgagee must confirm that all foundations will be serviceable for the life of the Mortgage and adequate to withstand all normal loads imposed.” There is also a section that addresses FHA minimum standards for the remaining economic life of the property. These requirements exist to protect the investment made in the | more...

November 9, 2015

Are FHA Loans Permitted For Living Trusts?

By Bruce Reichstein

Here’s a question that doesn’t come up that often, but is still an important aspect of the FHA loan program you might one day need to know: Are FHA home loans available for living trusts? The new FHA single family home loan rules published in HUD 4000.1 address this issue. The rules state: “The Mortgagee may originate a Mortgage for a living trust for a Property held by the living trust, provided the beneficiary of the living trust is a Cosigner and will occupy the Property as their Principal Residence, and the trust provides reasonable means to assure that the Mortgagee will be notified of any changes to the trust, including transfer of beneficial interest and any changes in occupancy status of the Property.” Note the occupancy requirement, which is | more...

November 4, 2015

HUD 4000.1 On “Flipping”

By Joe Wallace

Ever since the publication of the new FHA single family home loan rule book, HUD 4000.1, have been examining loan rules as published in the new guide. One important area of the FHA single family loan rulebook involves the guidelines for buying property with an FHA mortgage that is being sold after having been recently acquired by the seller. HUD 4000.1 states that, in order for a home to be eligible for an FHA mortgage, a certain amount of time must elapse between the sale of the home to the new owner and the subsequent sale of the property to another buyer–this time requirement is known as the HUD “anti-flipping” rule. It states: “Property Flipping is indicative of a practice whereby recently acquired Property is resold for a considerable profit | more...