Articles Tagged With: FHA Loan Rules

May 22, 2015

FHA Loan Rules, Bankruptcy, and Short Sales

A reader asks, “My bankruptcy was discharged in August of 2012. We did not reaffirm the mortgage either. One year later I short sales the house (August of 2013 it was sold). The short sale is not on my credit report nor are any missed payments. I was in the process of a mortgage modification when I filed bankruptcy. The firm that I used (which was later investigated by the FTC for mortgage fraud) promised they could take 100,000 off my loan (apparently some things are too good to be true). This under the advice of multiple lawyers I filed bankruptcy.” “I worked w a previous lender who put me threw du (or bu- the underwriting test used by fha). I passed that but he later took the approval back | more...

May 22, 2015

FHA Loan Questions: Appraisal Outcomes

By Joe Wallace

A reader asks, “I am the seller and was told by the buyers inspector that fha required that Federal Pacific Electrical stab lok was required to be replaced due to the potential that it Might Cause a safety issue. Any electrical can have a potential safety issue. My home was built in 1987.” While there isn’t a specific question here, the implied question seems to be, “Why was this correction required during the appraisal process?”. Any correction or repair that comes from the appraisal process could be required because A) the condition fails to meet FHA minimum property requirements or B) the condition fails to live up to state or local building code or C) there is another law or rule which must be satisfied. FHA loan appraisal guidelines are | more...

May 21, 2015

FHA Refinance Loans, Appraisals, and Refunds

By Joe Wallace

A reader asks, “I closed a cash out refinance in December 2014. The term was a fifteen year at 4.75%. I received a flyer from my lender in February that offered a 3.25% rate. I decided to inquire about a thirty year term as circumstances had changed significantly after the first of the year with my wifes job. The lender sent me a GFE and we locked in the rate. After a short while I was told I had to pay for another appraisal and basically resubmit all of the paperwork that I had previously sent to the lender. As of three months later I still have no refinance and am out of pocket over $500.” “Is this legal to open two FHA cases within two months and why was | more...

May 20, 2015

FHA Mortgage Loan Interest Rate Trends

By Joe Wallace

Six days ago, mortgage loan interest rates caught a break, moving lower to end the week. But this week that small breather didn’t stop an upward trend that resumed once more–rates moved higher on Monday and Tuesday, with 30-year fixed rate conventional mortgages mixed–some lenders offered a best-execution rate as low as 3.875%, with more offering best execution rates at 4.0%, and a smaller number reported going up above 4.0%, best execution. FHA mortgage loan rates have found a comfort zone at 3.75% best execution. FHA rates may vary more among participating lenders than their conventional counterparts, so it’s good to shop around for the most competitive rates. When we use the phrase “best execution” we mean FHA lenders offering the rates mentioned here to extremely well qualified borrowers with | more...

May 20, 2015

HUD Settlement In Pennsylvania Housing Discrimination Case

By Joe Wallace

The FHA/HUD official site has announced an important housing discrimination settlement between HUD and a housing authority in Pennsylvania. According to HUDNo. 15-055, “The U.S. Department of Housing and Urban Development (HUD) announced today a Conciliation Agreement with the Housing Authority of the City of Hazleton, Pennsylvania, settling allegations the housing authority discriminated against Hispanic households.” The agreement, the HUD press release states, resolves claims that the Hazleton, Pennsylvania housing authority, “violated the housing rights of Spanish-speaking applicants and tenants by requiring them to supply interpreters in order to communicate with housing authority staff and by denying them limited English proficiency services.” This, the press release states, is a violation of the Fair Housing Act. “When housing authorities accept HUD funding they are obligated to make their programs and services | more...

May 20, 2015

FHA Streamline Refinance Loans: A Reader Question

By Joe Wallace

A reader asks, “When an applicant is applying for a refinance under the FHA Streamline and their spouse (co-borrower) has passed (died), does the remaining borrower need to show the six months of payment history before they can apply for a refinance without doing a credit qualification?” FHA loan rules for streamline refinance loans are found in HUD 4155.1 Chapter Six. Section C has a heading titled, “Seasoning Requirement For A Streamline Refinance” which addresses this reader question. It states: “On the date of FHA case number assignment, –the borrower must have made at least six payments on the FHA-insured mortgage being refinanced –at least six full months must have passed since the first payment due date of the refinanced mortgage, and –at least 210 days must have passed from | more...

May 19, 2015

FHA Loan Appraisals: The Foundation

By Joe Wallace

A reader asks, “I am in the process of buying a home using a fha loan. The house that we are buying has a cracked foundation and the seller has already had it repaired and the repair has a lifetime transferable service and warranty. With it having had a repaired foundation will this pass the FHA minimum property standards? We have an appraisal in about a week and I am terrified its going to kill the deal.” Unfortunately it’s impossible to say whether a foundation repair job would bring the foundation up to minimum property requirements or state/local building code. Without inspecting the foundation, giving such a determination would be iffy at best. The important thing to remember is situations like these is that FHA loan standards aren’t the only | more...

When Is An FHA Loan Better Than A Conventional Loan?

May 19, 2015

FHA Loans, Foreclosure, and Credit Reports: A Reader Question

By Joe Wallace

A reader asks, “Suntrust Mortgage foreclosed on me in 2010. I had asked for a loan modification and they closed anyway. I had an equity line and I just found out that was placed on my credit report. I found out that my home sold for more than the 1st loan but they never paid the 2nd line of credit, both being with suntrust. when I call suntrust, all they say is any information given will be used to collect a debt. I do not owe that amount on my credit report and they will not do anything about it.” “I am one of the 2,200 in north Carolina that was foreclosed on improperly. I will be retiring from a local government office soon and cannot get a loan due | more...

May 18, 2015

FHA Loan Debt To Income Ratio Rules: A Reader Question

By Joe Wallace

A reader asks, “I am trying to purchase a house. My loans arent scheduled to begin repayment until Nov, of 2016, well over 12 months from now. I am currently enrolled. If you factor in what my loan payment will be, I am at a 46% debt/income ratio, if not, I am under the 41% line. My question is: Will my student loans count toward the debt/income ratio, even though I dont have to start paying them for another 18 months or so?” FHA loan rules in HUD 4155.1 Chapter Four, Section C addresses the student loan debt topic, as follows; “Debt payments such as a student loan or balloon note scheduled to begin or come due within 12 months of the mortgage loan closing must be included by the | more...

May 15, 2015

FHA Appraisals: A Reader Question

By Joe Wallace

A reader sent us a lengthy question recently about FHA appraisals. While won’t reprint the entire message here for the sake of brevity, we’ve kept the most relevant portions: “We are considering a HECM loan. The appraiser came out and we were not impressed. Prior to leaving, he told my husband and I that there was a couple of small things we needed to do before being able to close the loan(some peeling paint and a 1988 Cadillac inherited from my dad that was under our carport that we did not have licensed). Then we get a copy of the appraisal and under improvements he marked NO where it asks if there are any physical conditions that affect the livability, soundness, or structural integrity of the property. However, under reconciliation, | more...