Articles Tagged With: FHA Loan Rules

February 26, 2016

FHA Loan Mortgage Insurance Premium Rules

When you purchase a home using an FHA mortgage, you’ll be required to pay an Up Front Mortgage Insurance Premium (UFMIP) and monthly mortgage insurance premium (MIP). The rules governing this mortgage insurance are found in HUD 4000.1 and it’s important to know them before you start budgeting and planning for your new mortgage. FHA loan rules covering this insurance begin by defining terms. “FHA collects a one-time Upfront Mortgage Insurance Premium (UFMIP) and an annual insurance premium, also referred to as the periodic or monthly MIP, which is collected in monthly installments.” One thing important for borrowers to know is that the FHA does not consider these payments to be part of the mortgage guaranty limit–this is a fee assessed after those limits are calculated, even though the Up | more...

February 25, 2016

FHA Loan Questions: Are Military Members Eligible For FHA Mortgages?

By Joe Wallace

One common question about FHA loans involves whether or not military members are eligible to apply. Some military members may choose FHA mortgage options over VA loan benefits depending on circumstances, what do FHA loan rules tell lenders about veterans and currently serving members of the U.S. military? HUD 4000.1 contains the rules that apply in these cases. One of the reasons some could mistakenly assume military borrowers might not qualify for FHA mortgages has to do with the FHA’s occupancy rule for new purchase loans and refinances. But FHA loan rules include the following on occupancy for military applicants: “Borrowers who are military personnel, who cannot physically reside in a Property because they are on Active Duty, are still considered owner occupants and are eligible for maximum financing if | more...

February 23, 2016

HUD Announces Additional Funding For Housing Counseling Grants

By Joe Wallace

There are many times when, in the course of answering reader questions or discussing issues related to FHA loan prep, that we advise people to contact the FHA directly to request a referral to a HUD approved housing counselor. Housing counseling can be an important help for people–especially first time home buyers–who aren’t sure whether they qualify for an FHA mortgage or how to get started preparing for one. HUD has announced additional funding for housing counseling. According to a press release issued Friday February 19, 2016, “The U.S. Department of Housing and Urban Development (HUD) today announced it is making $40 million in grants available to support hundreds of housing counseling organizations across the country that assist families, including those buying their first home, struggling to locate affordable rental | more...

February 22, 2016

FHA Loans Credit Issues: Charge-Offs and Disputed Accounts

By Joe Wallace

There are many questions about FHA loan credit requirements. Some credit issues involve lender requirements which may go above and beyond FHA loan program minimums. Other issues involve FHA loan guidelines themselves-for example, the basic FHA policies toward charge-offs and disputed accounts on a credit report. How is the lender instructed to deal with these issues when processing an FHA loan application insofar as FHA loan minimum standards are concerned? HUD 4000.1 has the answers–we start with a look at the FHA definition of “charge-offs”, which the rule book defines as, “a Borrowers loan or debt that has been written off by the creditor”. If a lender encounters charge-offs in the borrower’s credit history, he or she must determine if the charge-off(s) happened due to one of the following: –the | more...

February 19, 2016

FHA Loan Questions: Occupancy Rules

By Bruce Reichstein

We get many questions in the comments section about various aspects of FHA loan rules, including the nuances of the FHA loan occupancy requirements. Here’s one of the latest: “I have a married couple that wants to purchase FHA the Husband is a stay at home Father the wife is the sole bread earner. The home they want to purchase is 3 hours from her employment. But the Husband and Son will be home all during the week and she will come home on weekends. Can that loan be approved? If so I need to show the underwriter because they want to deny the loan.” In general FHA loans are intended for principal residences. FHA loan rules define a principal residence as, “…a dwelling where the Borrower maintains or will | more...

February 17, 2016

FHA Loans and Credit Issues

By Joe Wallace

We get many questions in the comments section about credit requirements for FHA mortgage loans and refinance loans. Borrowers want to know if their credit scores are good enough, whether late or missed payments could be a factor in loan approval, or whether or not a certain type of income is acceptable for an FHA mortgage loan. In general terms, some credit issues depend on the lender. For example, FHA loan standards permit FICO scores below 600, but lenders tend to approve loans for borrowers with FICO scores in the mid-600s. The higher standards are lender requirements and this is allowed under FHA loan rules as long as the lender applies the higher standards in accordance with federal law. Lenders may require higher down payments from borrowers who don’t meet | more...

February 16, 2016

Electronic Signatures on FHA Loan Documents: FHA Loan Rules In HUD 4000.1

By Joe Wallace

In our last blog post we reviewed the rules in HUD 4000.1 on borrower signatures on FHA mortgage documents. Ever since the publication of HUD 4000.1 late last year we have been examining key passages in the new rule book as there have been many changes, updates, and restatements of FHA mortgage loan policy borrowers and industry professionals alike should be aware of. FHA loan rules for single-family mortgages permit the use of electronic signatures on certain FHA mortgage loan documents provided the signature and procedures used in collecting those signatures meets FHA standards. HUD 4000.1 addresses these requirements, starting with a basic definition of “electronic signature” to avoid confusion: “An Electronic Signature refers to any electronic sound, symbol, or process attached to or logically associated with a contract or | more...

February 16, 2016

FHA Loan Rules In HUD 4000.1: Signatures On Loan Documents

By Joe Wallace

FHA loan rules in HUD 4000.1 spell out a variety of procedures and requirements for the handling of new purchase mortgage loans and refinance loans. One portion of this new (published in late 2015) FHA single family home loan rulebook governs the requirement for borrower signatures on key documents in the FHA loan process. Borrowers must not be asked to sign blank pages or incomplete documents–that’s one of the most basic requirements of the FHA loan procedure. But what are the other rules? Can a borrower use a power-of-attorney for portions of the loan process? What other documents require the borrower’s signature? A section of HUD 4000.1 titled, “Signature Requirements For All Application Forms” states: “All Borrowers must sign and date the initial and final Fannie Mae Form 1003/Freddie Mac | more...

February 15, 2016

Mortgage Rate Trends: Higher After A Week Of Lows

By Joe Wallace

Mortgage loan interest rates took a major dip last week, hitting best-execution lows of 3.5% at the height of the week’s improvements. But on Friday a “bounce” happened, pulling things back a bit. Some industry professionals feel it’s possible this move higher could be a correction or trend to come after the unusual week of lows we’ve seen, but it’s too early to tell. 30-year fixed rate conventional mortgage loans wound up at a best-execution 3.625%, which ends the week in territory that is still quite good. Some may regret if they missed out on the 3.5% best execution rate that appeared briefly last week, but these rates are still in a place we haven’t seen in a long time–some sources say these rates are reminiscent of the record lows | more...

February 12, 2016

HUD Foreclosure Policy Updates: Reasonable Diligence and Delays

By Joe Wallace

Recently the FHA and HUD updated guidance to lenders with regard to foreclosures and the “reasonable diligence” required to make sure the foreclosure action happens in a timely manner. One of the biggest complaints about the foreclosure process is how long it can take for a financial institution or the entity that is to take possession of the property to do so. The new HUD guidelines require lenders to act in a reasonable time frame. According to mortgagee letter HUDNo.16-003, “…when foreclosure of a defaulted loan is necessary, mortgagees must exercise reasonable diligence in prosecuting the foreclosure proceedings to completion and in acquiring title to and possession of the property. However, the mortgagee letter adds: “When certain delays in completing foreclosure and acquiring possession are caused by circumstances beyond the | more...