Articles Tagged With: FHA Mortgage Loans

February 25, 2016

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

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 24, 2016

FHA Refinance Loan Types

By Joe Wallace

Do you want to refinance your home loan into an FHA mortgage or refinance an existing FHA mortgage? There are many different types of refinancing options and when HUD 4000.1, the new single family FHA loan rulebook was published in 2015 the entire refinance loan program rules were included in the new volume. That means some policies were updated, some were changed or modified, and some were simply restated. HUD 4000.1 has a comprehensive list of the different types of FHA refinancing options open to those with single-family mortgages. Let’s examine them: FHA Cash-Out Refinancing A Cash-Out Refinance is described in HUD 4000.1 as, “a refinance of any Mortgage or a withdrawal of equity where no Mortgage currently exists, in which the mortgage proceeds are not limited” to specific purposes. | 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 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 9, 2016

HUD Updates Single Family Loan Foreclosure Policy

By Joe Wallace

One of the biggest complaints about the foreclosure process involves the length of time it can take for the lender to take ownership of a foreclosed property. This is important for many reasons, but delays in transfer of ownership can also result in delays in a borrower’s ability to become a property owner once more later down the line. The FHA and HUD have issued a mortgagee letter addressing this issue where FHA Title II and Reverse Mortgages are concerned. “Single Family Foreclosure Policy and Procedural Changes for HUD Title II Forward Mortgages and Reverse Mortgages” updates “Reasonable Diligence time frames” effective for all cases where the deadline for taking “First Legal Action to initiate foreclosure” occurs on or after January 1, 2016, according to the FHA/HUD official site. According | more...

January 29, 2016

FHA Mortgage Loan Limits For New Purchase Loans And Refinance Loans

By Joe Wallace

We’ve gotten some questions recently about FHA mortgage loan amounts, so it seemed like a good time to post the FHA loan rules found in HUD 4000.1 about how maximum loan amounts are calculated. There are FHA loan guaranty limits and FHA mortgage loan amounts–the two shouldn’t be confused as FHA mortgage loan guaranty limits refer to the amount of money the FHA will guarantee for the loan, whereas the maximum loan amount is the highest amount for a specific transaction that the lender/FHA loan rules will allow. FHA loan rules say the maximum can be affected by the type of transaction. You can find the FHA maximum guaranty amounts for your housing market at the FHA official site: https://entp.hud.gov/idapp/html/hicostlook.cfm. HUD 4000.1 says of maximum loan amounts: “A Mortgage that | more...

January 28, 2016

FHA Loan Questions: Maximum FHA Loan Amounts For Building A Home

By Joe Wallace

A reader asked us a question recently in the comments section about FHA new construction loans: “My husband and I will be building a home, we have land that we are interested in, what is the max for a construction loan and build that FHA gives?” To be clear, the FHA itself does not issue loans–the borrower must find a participating FHA lender willing to offer a new construction loan. When it comes time to determine the maximum loan amount for new construction mortgages, the FHA loan rulebook has specific instructions for the loan officer. How does the FHA instruct lenders to determine the maximum mortgage amount in these cases? According to HUD 4000.1: “The maximum mortgage amount is calculated using the appropriate purchase Loan-to- Value (LTV) percentage of the | more...

January 20, 2016

FHA Appraisals: A Reader Question

By Joe Wallace

A reader got in touch recently to ask about an FHA appraisal. “…septic system…was discovered bad after closed on and moved in. The home had been for sale for over a year and unoccupied for 6-8 months. FHA appraisal didn’t do any inspection of this system and it appears they should have due to the length of time it hadn’t sold or been unoccupied. It has been replaced and trying to be compensated for the expense. Thoughts?” It’s very important for all borrowers to understand that an FHA appraisal is NOT a home inspection. Once complete, the FHA appraisal should not be taken as any sort of stamp of approval from the FHA that a home is free of defects. Borrowers should ALWAYS pay for the optional (but extremely important) | more...

January 19, 2016

FHA Loan Questions: Tax Service Fees

By Joe Wallace

A reader got in touch with us recently to ask a question about the allowable fees and expenses associated with FHA new purchase home loans (also known as “forward mortgages”). The gist of the question–can an FHA loan applicant be charged a tax service fee as part of closing costs or other loan-related fees and expenses? The answer to this question and others like it can be found in HUD 4000.1, in the portion of the rule book titled Part III Servicing And Loss Mitigation. This section includes a list of prohibited fees and expenses–costs that cannot be charged to the borrower. That list includes the following information: “The Mortgagee must not charge the Borrower for the following services: –costs of telephone calls, telegrams, personal visits with the Borrower, certified | more...