Articles Tagged With: FHA Loan Rules

August 30, 2016

FHA Announces Changes To Help Delinquent Borrowers Avoid Foreclosure

The FHA has issued a press release announcing changes to its loss mitigation program guidelines to help borrowers avoid foreclosure and remain in their homes in times of financial difficulty. According to HUDNo.16-127, “The Federal Housing Administration (FHA) today announced new procedures to strengthen the process mortgage servicers use to help struggling families avoid foreclosure and remain in their homes. FHA is streamlining its loss mitigation protocols that servicers must use when evaluating and deploying home retention options, foreclosure alternatives that allow delinquent borrowers to retain their home.” By way of background, the FHA official site (in Mortgagee Letter 2016-14) explains, “The evolution of FHAs loss mitigation guidance has also led to improved consumer engagement, the streamlining of FHAs Pre-Foreclosure Sale option, and a new loan modification by which Mortgagees | more...

August 29, 2016

FHA Loan Questions: Home Inspections

By Joe Wallace

A reader asks, “So what do I do if I bought a house with an FHA loan and 2 weeks after closing the roof leaks? You can visually see more than 3 layers of roofing without setting foot on the roof or a Ladder? Obviously the roof didnt have 2 years of life left in it and obviously it was in need of repair. Also the inspector I hired didnt go up on the roof either. What are my options now? Also code in my area is no more than 3 layers of roofing and after getting estimates the house has 5 layers on it.” FHA loan appraisals and home inspections are two different things. The reader question in this particular case seems to indicate that the borrower paid for | more...

August 26, 2016

FHA Loan Rules: Post-Bankruptcy

By Joe Wallace

There are many questions about FHA loans and bankruptcy. Here’s an example of the kinds of questions we answer on a regular basis about becoming eligible once more for an FHA mortgage in the wake of a bankruptcy discharge: “My credit score is low and I will be discharged from bankruptcy coming this November. What can I do to raise my credit score and qualify for a FHA loan?” It’s very important for borrowers in this situation to know that FHA loan rules in HUD 4000.1 require a minimum waiting time (also known as a ‘seasoning period’) before a borrower can apply for an FHA mortgage. This waiting time begins at the time the bankruptcy is discharged, not from when it was initially filed. The waiting time depends on the | more...

August 25, 2016

Identity Of Interest Transactions: Another Reader Question

By Joe Wallace

A reader asks, “I have a client that inherited property along with 2 siblings from the Mothers estate. The client has resided in the subject property for 1 year and now wants to buy the other siblings out. Is it correct, that this scenario would meet the exempt status of identity of interest guidelines?” The reader is asking this question in reference to an earlier post we wrote about FHA loans and identity of interest transactions. An FHA mortgage typically requires a minimum 3.5% down payment for new purchase loans. But the required down payment can be higher if there is an “identity of interest” as described in HUD 4000.1: “An Identity-of-Interest Transaction is a sale between parties with an existing Business Relationship or between Family Members. Business Relationship refers | more...

August 24, 2016

FHA Loan Basics You Should Know

By Joe Wallace

If you are thinking about buying a home and are weighing your options for an FHA home loan, there are some basics you should know about FHA mortgages that can help you better prepare for an FHA loan application. FHA home loans are for all financially qualified applicants; there are no income minimums OR maximums. Borrowers should know that FHA mortgages are designed to help borrowers at all income levels find an affordable home. Your debt to income ratio (the amount of money coming in each month compared to your monthly expenses and financial obligations) is an important factor in loan approval, but you will not be disqualified because of an income threshold based on your annual income or monthly income alone. FHA mortgages allow you to purchase a home | more...

August 23, 2016

FHA Loan Question: Shared Wells

By Joe Wallace

A reader asks, “Theres a well shared by seven houses producing six gallons per minute for all seven houses. The well went dry and now we were told we have till December to Feb before it goes dry. Will the loan agencies finance homes at the tail end of a wells life?” We won’t presume to speak for financial agencies or their requirements, as standards may vary from lender to lender. However, we can reference FHA home loan rules to see what is permitted. FHA loan approval depends on a variety of factors, not just a borrower’s credit report or other issues. One factor is the condition of the property itself, which is determined by an FHA appraisal. The purpose of an FHA appraisal is to insure properties to be | more...

August 22, 2016

HUD Charges Georgia Landlords With Fair Housing Act Violations

By Joe Wallace

The Fair Housing Act was passed to protect those in search of housing, whether they need to rent or purchase. Discrimination against a renter or potential renter is just as serious as discrimination against those who wish to purchase housing; many who want to buy a home must seek out rental property in the meantime and violations of the Fair Housing Act affect these renters who intend to be owners. The Department of Housing and Urban Development aggressively pursues cases of housing discrimination regardless of renter/buyer status and one of the most recent cases stems from a complaint lodged by a single mother in Georgia. According to a press release on the HUD official site, “The U.S. Department of Housing and Urban Development (HUD) today announced it is charging a | more...

August 16, 2016

FHA Loans and Social Security Income: A Reader Question

By Joe Wallace

A reader asks, “I am halfway though a 15 year mortgage on a 2009 manufactured home. I am disabled, collecting SSD and my wife works as a school teacher.Would I qualify to refinance my home?” FHA loans and refinance loans have rules that do permit the use of Social Security income to qualify for a loan, provided the income meets certain requirements. The lender is required to determine that the income is likely to continue. HUD 4000.1 has guidelines and instructions to the loan officer that include the following about Social Security and other disability benefits: “Disability Benefits are benefits received from the Social Security Administration (SSA), Department of Veterans Affairs (VA), other public agencies, or a private disability insurance provider. The Mortgagee must verify and document the Borrowers receipt | more...

August 16, 2016

FHA Loan Rules: Rental Income

By Joe Wallace

When purchasing a home with an FHA single-family loan, a prospective borrower may want to know whether rental income from the property to be purchased with an FHA mortgage can be counted in the borrower’s debt-to-income ratio. FHA loan rules do permit this under specific circumstances, and borrowers should know that FHA loan occupancy rules apply. Borrowers are required to occupy the home as their primary residence, but for those purchasing property with more than one unit, the rental issue is a factor many consider. The rules for rental income are found in HUD 4000.1 and include the following: “The Mortgagee may consider Rental Income from existing and prospective tenants if documented in accordance with the following requirements. Rental Income from the subject Property may be considered Effective Income when | more...

August 15, 2016

Mortgage Rate Trends: Ups and Downs

By Joe Wallace

Mortgage rates went higher and lower last week. They bounced higher Monday, recovered Tuesday, and repeated that cycle on Thursday and Friday. At week’s end, rates recovered back to 30-day lows, but there are a variety of scheduled economic data releases ahead that could push rates higher depending on investor reaction to them. Friday, 30-year fixed rate conventional mortgages wound up in range between 3.375 and 3.5% best execution, though some sources claim 3.375% is more available at the time of this writing. FHA mortgage loan interest rates are holding in their comfort zone at 3.25% best execution, though FHA rates can vary more among participating lenders. It pays to shop around. Best execution rates are offered to borrowers with ideal credit. Your FICO scores, loan repayment history and other | more...