Articles Tagged With: FHA Loan Rules

February 2, 2015

A Reader Question: FHA Loan Rules Post-Chapter 13 Bankruptcy

A reader asks, “Please help me understand the preceding statement. First it states the borrower must have at least one year of on time payments to the trustee in a chapter 13. Then it states the borrower must be 2 years post discharge of chapter 13. My wife and I filed chapter 13 in May of 2014, when can we ask the courts approval to enter into a new mortgage. Might we be eligable as of 5/2015, or as the statement suggests, 2 years post discharge?” This question is in reference to material in one of our blog posts, FHA Loans Following Chapter 13 Bankruptcy. It is true that the FHA requires borrowers to have at least a full year of on-time payments under the Chapter 13 arrangement, and the | more...

January 31, 2015

FHA Loan Rules On Appraisals and Required Corrections: A Reader Question

By Joe Wallace

A reader asks, “Is the seller responsible to pay for all repairs before closing?” Assuming that this reader question is in reference to required corrections or alterations to a home listed by the FHA appraiser, much depends on the type of repairs or corrections required. If repairs or corrections are required to fix hazardous conditions, those fixes must happen and a compliance inspection (where required) must occur before the loan can be approved. Let’s see what HUD 4155.1 Chapter Four says about the appraisal process and required corrections: “In the performance of an FHA appraisal, the appraiser must • denote any deficiency in the appropriate section(s) of the appraisal report (site issues in the site section, improvement issues in the improvements section, and so on), and • note those repairs | more...

January 30, 2015

FHA Mortgage Loan Rules For The New Mortgage Insurance Premium Cuts

By Joe Wallace

A great deal of reader questions have come in about the FHA’s recent move to cut the annual mortgage insurance premium on FHA loans with case numbers assigned on or after January 26 2015. We thought it was a good time to remind our readers and clarify what the FHA has announced with respect to mortgage loans affected by this new rule. Which mortgage loans are affected by the FHA MIP cuts? According to the FHA mortgagee letter (ML) announcing the cuts, “This ML reduces the rate for annual MIP for all Title II forward mortgages, with terms greater than 15 years, except; –single family forward streamline refinance transactions that are refinancing existing FHA loans that were endorsed on or before May 31, 2009; –Section 247 mortgages (Hawaiian Homelands) Borrowers | more...

January 29, 2015

FHA Refinance Loans: Another Chapter 13 Question

By Joe Wallace

We have gotten a large volume of reader questions about refinancing a home while in Chapter 13 bankruptcy. Here’s the latest: “We have current mortgage, never behind on payment. We like to refinance our home mortgage, but we are discharge from Chapter 13 before couple months! How long we have to wait and are we are qualified? Thank you in advance!” Let’s examine what the FHA official site has to say about FHA loans and bankruptcy. It’s important to note that all situations vary including the rules at one financial institution compared to another. Some lenders may be willing to work with certain borrowers in circumstances that others would not–just because the FHA loan rulebook has provisions for borrowers to apply for loans while the applicant is dealing with a bankruptcy or the discharge | more...

January 27, 2015

FHA Loans, Seasoning Requirements and Legal Assistance: A Reader Question

By Joe Wallace

A reader asks, “Have a question on issue of a legal settlement made on property ,, money to settle suit was borrowed on a promossory note and given to attorneys… few months later owner gave a lien to individual in case of untimely death , deed clearly states that it was NOT a home equity loan and title company agrees that the property is not subject to home equity rules etc,, A reverse mortgage lender tells me that it has to be seasoned as a home equity loan which kills the loan My attorney has shown lender that money borrowed from individual went to settlement funds and small attorney fee and was not an equity loan! There was no HUD or closing,, the lender gave me a clear deed! Surly there is | more...

January 22, 2015

FHA Loans Following Chapter 13 Bankruptcy: A Reader Question

By Joe Wallace

A reader asks, “i filed ch 13 in 2012 and my case has been discharged as of Dec 2014. do i have to wait 2 years from that discharge date or the filing date to qualify for FHA?” FHA loan rules for applying for a new home loan in the wake of a bankruptcy state that there is a minimum seasoning period or waiting period required after the discharge of the bankruptcy. For Chapter 13 bankruptcy, the FHA official site (www.fha.gov) has a Frequently Asked Questions page about applying for a new FHA loan post-bankruptcy, which states the following: “A Chapter 13 bankruptcy does not disqualify a borrower from obtaining an FHA mortgage provided the lender documents that one year of the payout period under the bankruptcy has elapsed and | more...

January 22, 2015

FHA Loan FICO Score Requirements: A Reader Question

By Joe Wallace

A reader asks, “We r trying to buy a new double wide and property combo. But our credit scores are 582 & 533. The place where we are getting the house thru said it probly wouldn’t be a problem to get the loan. What do u think?” The answer to this question is fairly simple. When a borrower’s FICO scores are within the FHA minimums for maximum financing, it’s then the lender’s decision to approve or deny the loan based on the lending standards of that financial institution. Let’s examine the FHA FICO score minimum chart as published in HUD 4155.1 and on the FHA official site: That’s an exact reproduction of the chart found in HUD 4155.1. As you can see, one borrower’s credit score is within the FHA | more...

January 21, 2015

FHA HECM Loan Origination Fees: What CFPB Says

By Joe Wallace

In our previous blog post, a reader asked us an important question about FHA Home Equity Conversion Mortgage (HECM) loan origination fees. Here’s that question: “Is there a cap on fees a broker can be compensated for their part on a HECM loan, and if the lender list origination fee that is clearly greater than the $6000 max, which includes the broker compensation paid by the lender. My question is is the lender in violation of the origination cap?” FHA HECM loan origination fees are indeed capped at a maximum of $6,000 for certain HECM loans above a specific dollar amount. The Consumer Financial Protection Bureau, a government finance watchdog organization, has this to say about FHA HECM loan origination fees: “An origination fee is what the lender or mortgage | more...

January 16, 2015

FHA Loans In Community Property States: A Reader Question

By Joe Wallace

A reader asks, “Husband and wife are seperated for the moment. No plans to divorce for a while. Husband wants to purchase a home in Georgia. The wife will also purchase at some time in the future. Do they have to be divorced before the husband can purchase a home?” There are too many missing details to give even a general answer on this one–do the married couple currently own a home and have a mortgage? If so, who is taking ownership of the property and financial responsibility for the loan? Those are important factors in any home loan application–the amount of current debt, the amount of current income, and how much of that income is taken up by the current debt. A borrower with too much debt and not | more...

January 16, 2015

FHA Loan Reader Questions: Do I Qualify?

By Joe Wallace

A reader asks, “I wanted to know if I can qualify for any of FHA products for first time homebuyers:-My wife owns a home in her name only.-I am not listed anywhere on the deed, title, loan, etc-We currently live in her 2-bedroom home, but have outgrown it. We now have 2 kids and my mother is living with us.We would like to move to buy a new home, in my name only. I have never owned a home, however, my wife and I have been filing jointly for all of our tax returns (her property is listed on all of our tax returns). My wife plans to keep her current home as an investment property. So, do I qualify for a FHA loan, or any of your listed down payment assistance programs?” | more...