Articles Tagged With: FHA Loan Rules

October 30, 2014

FHA Loans and Earnest Money: A Reader Question

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...

What you should know about FHA 203(h) Loans For Disaster Victims

October 29, 2014

FHA Mortgage Rate News: Rates Move Higher After Fed Announcement

By Joe Wallace

Our discussion last week of mortgage rate trends going into this week’s Fed announcement included the notion that mortgage rates might retreat into a defensive posture–defensive as in, little change (if any) in the two trading days leading into Wednesday’s scheduled announcement by the Fed. When the word came from the Fed on Wednesday, talk included the end of the Fed’s Quantitative Easing (QE) program. QE saw the government putting billions of dollars into markets in order to help stabilize the nation economically. Those investments affected mortgage rates, but when talk began of tapering off the program and eventually ending it, investor reaction was negative. Mortgage loan rates can and did move higher with more talk of the ifs and whens of the end of that program. Today following the Fed | more...

October 23, 2014

FHA Loan Interest Rates: The Rate Lock

By Joe Wallace

We write weekly, sometimes more frequently, about the state of FHA loan interest rates. We discuss trends, terminology, and the possible future of those rates. But some potential FHA borrowers are confused by terms like “locking” and “floating”. What does it mean to get an interest rate lock on an FHA mortgage loan? Let’s start by examining the basic rules of negotiating FHA rates on the loan. According to the FHA loan rulebook, HUD 4155.1, the lender and borrower are expected to come to an agreement on interest rates on the loan–the FHA does not set the rates. “Under all currently active FHA single family mortgage insurance programs, the borrower and the lender negotiate the interest rate and any discount points.” That’s found in the opening chapter of HUD 4155.1. | more...

October 17, 2014

FHA Loan Modification: A Reader Question

By Joe Wallace

A reader asks, “I have an FHA loan serviced by ******. I am trying to modify my loan. The Bank told me that I was eligible for modification. I repeatedly send all the forms, that they asked me to send. After six months they told me that they could’t modify because my income was low.” “Then they asked me to submit all the paper work again. While the paper work was in review they told me that they couldn’t modify because they had dropped the mortgage insurance. Even it was under review they turn the house to a trustee for sale, and also they gave me another excuse, that the investor (name deleted) didn’t want to modify my loan. I had to file chapter 13 in order to keep the house | 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 14, 2014

FHA Loans and “Reasonable Commuting Distance”: A Reader Question

By Joe Wallace

A reader asks, “What is the maximum commuting distance allowed for a FHA financed primary residence?” This question doesn’t have a set answer, since the FHA does not spell out an exact mileage amount or specific driving time that would meet or exceed the notion of “reasonable commuting distance”. Let’s examine what the FHA loan rulebook, HUD 4155.1 Chapter Four Section B has to say about reasonable commuting distances. The information below is presented in the context of advising the lender on what is appropriate if an FHA borrower wishes to apply for a second FHA loan for the purpose of getting another home. This is generally not allowed, but exceptions can are are granted for increases of family size or a job relocation. From HUD 4155.1 Chapter Four: “A | 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...

October 7, 2014

FHA Loan MIP Rules: A Reader Question

By Joe Wallace

A reader asks, “We acquired FHA loan last April 2010 and refinanced it twice. Our original loan was 410k and our current bal is 383k. How can we eliminate the MIP and loan APR is 3.25%.” Last year, FHA Mortgagee Letter 2013-04 announced changes to FHA loan policy for mortgage insurance premiums. That policy was altered to require MIP payments for the maximum duration allowed by law on FHA loans. According to the FHA official site: “For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute. See 12 U.S.C. § 1709(c)(2)(B).” “For all mortgages regardless of their amortization terms, any mortgage involving an original principal obligation (excluding financed Up-Front MIP (UFMIP) less than or | more...

October 6, 2014

FHA Loans, Projected Income: A Reader Question

By Joe Wallace

A reader got in touch with a question related to our post “FHA Loan Answers: New Job Income” which included the following: “Many FHA loan applicants want to know if taking a new job will affect their chances at FHA loan approval. FHA loan rules are designed to help guide loan officers through the qualification process for a variety of scenarios including those where the borrower may have “projected income” that could be factored into the borrower’s debt-to-income ratio. What do FHA loan rules say about projected income? How is it defined? The answers to these questions and more can be found in HUD 4155.1 Chapter Four, Section E. “Projected income is acceptable for qualifying purposes for a borrower scheduled to start a new job within 60 days of loan closing | more...

October 2, 2014

FHA Loan Credit Report Requirements

By Joe Wallace

When you apply for a home loan, it helps to know what the lender is looking for from your credit report. When it comes to FHA mortgages, the lender wants to see 12 months of on-time payments on your financial obligations as well as the actual numbers of your credit scores as reported by the three major credit reporting agencies. But what does the FHA require from those credit reports? What does the lender need in order to properly document you as a good credit risk? The FHA loan rules for credit report delivery and content are found in HUD 4155.1 Chapter One Section C. A quick glance at this section reveals that credit reports cannot be delivered to the lender from third-parties including the borrower. The credit reporting agency | more...