Articles Tagged With: FHA Loan Requirements

November 18, 2014

FHA Extends Program For Underwater Home Owners

The FHA has announced an extension to a program started to help borrowers who are underwater on their mortgages. FHA mortgagee letter 2014-23 describes the original “FHA Refinance of Borrowers in Negative Equity Positions” program started in 2010 which, according to the FHA/HUD official site, “provided enhancements to the Federal Housing Administration (FHA) refinance program that gave a greater number of responsible borrowers an opportunity to remain in their homes.” These FHA enhancements were designed, “to maintain homeownership by providing borrowers, who owe more on their mortgage than the value of their home, opportunities to refinance into an affordable FHA loan. This opportunity allowed borrowers to qualify for an FHA refinance loan provided that the lender or investor wrote off the unpaid principal balance of the original first lien mortgage | more...

November 12, 2014

FHA PMI Rules: A Reader Question

By Joe Wallace

A reader asks, “Does the PMI not apply to down payments of 20% and above?” The FHA has changed the rules for PMI–Private Mortgage Insurance–and as a result all FHA home loans known as “forward mortgages” with case numbers assigned on or after June 3 2013 now have different requirements than previously approved FHA mortgages. FHA Mortgagee Letter 2013-04 rescinded a set of FHA PMI rules and enacted new ones in their place. The rescinded rules include the following changes as described in FHA Mortgagee letter 2013-04; “…rescinds the automatic cancellation of the annual MIP collection announced in MLs 2000-38 and 2000-46; ….rescinds ML 2011-35, under which mortgages with terms of 15 years or less and LTVs of less than or equal to 78 percent at time of origination were exempt from the | more...

November 7, 2014

FHA Loan FICO Score Requirements: A Reader Question

By Joe Wallace

A reader asks, “I have a question on the down payment assistance and credit scores. We have credit scores that average to 640 and 620. Our lender has asked us to either raise our scores or have a 2 month reserve in addition to our 3.5% down payment as a requirement for FHA/HUD is this standard?” FHA loan rules do specify a minimum FICO score for borrowers who want to qualify for the lowest down payment of 3.5%. That FICO score is 580. However, lender standards can and often are higher than that number. FHA loan rules do not prevent the lender from have more strict standards as long as they are applied in compliance with federal law, Fair Housing Act regulations, etc. Individual borrower circumstances can and often do | more...

October 30, 2014

FHA Loans and Earnest Money: A Reader Question

By Joe Wallace

A reader asks, “I have a property listed and in escrow with an FHA buyer who was so confident that she would get the loan (the lender provided a fully approved letter, contingent on final review and appraisal), that she agreed to unconditionally release the EMD to my seller.” “Long-story-short, the buyer decided that in light of suspicions that she might not be approved in the final review, she would cancel the loan process and kill the deal. Now she wants her released EMD back and her agent claims there are FHA regulations that demand the return. I cannot find them. Do they exist? What do they say?” The reader doesn’t specify, but we assume the acronym “EMD” stands for “earnest money deposit”. With that in mind: This is a | more...

October 28, 2014

FHA Appraisals and Leaking Roof Issues: A Reader Question

By Joe Wallace

A reader asks, “My daughter bought home with FHA approved loan FHA appraisal did not said roof is in bad condition. After 4 months roof is leaking in 4 spots. She called roofing company to see what’s going on and they said roof should be replaced but with FHA regulations roof should last at least 2 years. What should she do now?” The FHA and HUD address this specific issue in a document for FHA loan applicants titled, “For Your Protection, Get A Home Inspection“. It says in part: “An appraisal is different from a home inspection. Appraisals are for lenders; home inspections are for buyers. An appraisal is required to: — Estimate the market value of a house; — Make sure that the house meets FHA minimum property standards/requirements; and — Make sure | more...

October 22, 2014

FHA Loans, Foreclosure, and New FHA Loan Applications: A Reader Question

By Joe Wallace

A reader asks, “I was a cosigner on a FHA loan in 2007 and my ex-boyfriend let the home go into a foreclosure process, the home was paid in full before it was foreclosed. it has been a year that the home has been paid off. Will I still be able to qualify for a FHA loan now? My credit score is good and I have all bills paid up to date including credit cards.” This is a situation that may or may not have applicable FHA loan requirements depending on the circumstances of the foreclosure. Since the reader indicates that the foreclosure didn’t actually happen, there may be a gray area that’s not fully addressed by FHA loan rules. However, lender standards may play a big part in whether | more...

October 20, 2014

Basic FHA Condo Loan Rules

By Joe Wallace

If you’ve never considered owning or purchasing a condo unit before, you might be surprised to learn that the FHA single-family loan program does permit the purchase of approved condo units with an FHA loan. The rules for condo loans are different than for traditional single family houses because of the shared nature of the property, so borrowers should become familiar with the FHA requirements for condo loans. To begin with, what does the FHA classify as a condo? Take a look at the image above–could these houses be classified as condos? It depends partially on the nature of the housing market. In Chicago, for example, a house split into more than one dwelling could classify as a condo project if it meets certain FHA parameters–and in Chicago, such modifications | more...

October 16, 2014

HUD Awards Millions To Help Fight Housing Discrimination

By Joe Wallace

In recent weeks we’ve seen a variety of press releases from the FHA/HUD discussing settlements in cases where HUD investigated alleged violations of the Fair Housing Act and other anti-discrimination housing laws. Now, the Department of Housing and Urban Development has issued a press release announcing millions of dollars in federal funds being awarded to agencies trying to raise awareness of Fair Housing laws. According to HUDNo. 14-123, “The U.S. Department of Housing and Urban Development (HUD) today awarded $38.3 million to more than 100 fair housing organizations and other non-profit agencies in 43 states and the District of Columbia to address housing discrimination.” The HUD press release says that competitive grants in this area are funded via the HUD Fair Housing Initiatives Program, “to help enforce the Fair Housing | more...

October 15, 2014

FHA Loan Reader Questions: Minimum Property Requirements and Refinance Loan LTV

By Joe Wallace

Sometimes we get lengthy reader questions that require detailed answers, and other times we get quick, easy-to-answer questions. Today we field two of those from readers who want to know some FHA loan basics. Our first reader question: “What are the requirement for houses close to gas station?” It’s not clear exactly what the reader wants to know–more detail is needed for an in-depth answer, but we can probably assume the reader wants to know if there are FHA minimum property requirements for homes located near a commercial gas station. While the FHA loan rulebook doesn’t specifically address this situation, it should be noted that no home located within a “high pressure gas pipeline easement” can be eligible for an FHA home loan. Whether or not this pertains specifically to | more...

October 13, 2014

FHA HECM Loan Closing Costs: A Reader Question

By Joe Wallace

A reader asks, “What are the standard closing costs for FHA/HUD/HECM for my property with market value of 510,000.00 with 240,000.00 in debt?” FHA loan closing costs are not standardized–they vary depending on the market, the lender, the nature of the services required to underwrite and close the loan and other factors. State law can and often does affect certain types of loan transactions so there may be factors there that might not apply elsewhere. The Department of Housing and Urban Development publication “Shopping For Your Home Loan: HUD’s Settlement Cost Booklet” breaks down how things can are are charged, but only uses examples and does not come with set, across the board settlement costs–you won’t find a HUD publication that can tell you exactly how much the settlement costs | more...