Articles Tagged With: FHA Refinance Options

December 12, 2012

FHA Loan Eligibility Rules–Who Is Automatically Disqualified?

We get many questions about FHA loan rules for those who have had bankruptcies, foreclosures, loan defaults and other credit issues on their records. FHA loan rules are clear–having these issues in your credit history is not an automatic cause to reject a loan application, but the borrower must wait out a minimum “seasoning period” after foreclosure, bankruptcy, etc. But there are certain cases where a borrower IS automatically ineligible for an FHA loan. What are these situations? According to FHA loan rules as described in Chapter Four of HUD 4155.1 in the section titled “Basis for Rejecting a Borrower for Federally Related Credit” you’ll learn that an FHA loan applicant is “not eligible to participate in FHA-insured mortgage transactions if he/she is suspended, debarred, or otherwise excluded from participating | more...

December 12, 2012

Are Military Members Eligible For FHA Home Loans?

By Joe Wallace

Members of the Army, Navy, Air Force, and Marine Corps have a military benefit through the Department of Veterans Affairs that they can use to purchase a home with no downpayment in most cases, and several other perks. Some of those perks are very similar to FHA loans, such as the option to pre-pay or pay off the loan ahead of schedule without a penalty. But are military members who are eligible for VA loans also eligible for an FHA loan if they choose FHA over VA? Does having the option to apply for a VA home loan render them ineligible for an FHA mortgage instead? FHA loan rules do not exclude military members; there are many reasons why a borrowe may choose not to use his or her VA | more...

November 27, 2012

FHA Foreclosure Avoidance Options

By Joe Wallace

In a recent Mortgagee Letter (ML2012-22), the FHA and HUD describe a variety of changes to FHA Loss Mititgation options. “Loss Mitigation” basically refers to foreclosure avoidance programs for borrowers in trouble on their FHA mortgages. The FHA Mortgagee Letter opens by stating, “No later than 90 days after issuance of this Mortgagee Letter, (November 16, 2012) mortgagees must begin to assess mortgagors in default under FHA’s loss mitigation priority order and policies referenced herein. FHA updates on its loss mitigation/foreclossure avoidance policies includes the following new requirements, as described below. According to the FHA, “Before a mortgagee considers a delinquent mortgagor for one of FHA’s Loss Mitigation Home Retention Options, the mortgagee must first evaluate the mortgagor for both Informal and Formal Forbearance Plans.” Additionally, “Informal and Formal Forbearance | more...

November 20, 2012

FHA Issues Mortgagee Letter, Sets Policy For Federal Disaster Areas

By Joe Wallace

Whenever a natural disaster strikes and a federal disaster area is declared in the affected zone, the FHA and HUD have issued guidance about foreclosure moratoriums, assistance for those trying to recover from the disaster and other details. These announcements are usually issued as Mortgagee Letters and come out on an as-needed basis. But now the FHA has codified its position on federally declared disaster areas in general, thanks to the new FHA/HUD Mortgagee Letter, 12-23, “Guidance for FHA-Approved Mortgagees Originating and Servicing Mortgages in Presidentially-Declared Major Disaster Areas”. According to the announcement, “This Mortgagee Letter (“ML”) provides general guidance to FHA-approved mortgagees with loans in any Presidentially-Declared Major Disaster Areas (“Disaster Areas”). Further specific guidance for individual disasters may be communicated as necessary.” This general guidance includes, “A moratorium | more...

November 9, 2012

FHA 203(k) and Streamlined 203(k) Loans

By Joe Wallace

The FHA offers a home loan program known as the 203(k), which the FHA/HUD official site describes as a home loan guaranty from the FHA for the purpose of helping “homebuyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home.” The 203(k) program “fills a unique and important need for homebuyers. When buying a house that needs repair or modernization, homebuyers usually have to follow a complicated and costly process. The interim acquisition and improvement loans often have relatively high interest rates, short repayment terms and a balloon payment.” The FHA 203(k) option offers an alternative to this, featuring a single mortgage at a fixed or adjustable rate, | more...

November 6, 2012

FHA Short Refinance Program Enhancements

By Joe Wallace

Earlier in 2012, the FHA announced some changes to its FHA Short Refinance program, which was originally announced in 2010 in a Mortgagee Letter titled ” FHA Refinance of Borrowers in Negative Equity Positions”. This program, also known as the FHA Short Refinance, is designed to allow “responsible homeowners with negative equity an opportunity to refinance their homes. These enhancements were designed to maintain homeownership by providing borrowers with conventional loans, who owe more on their mortgage than the value of their home, opportunities to refinance into an affordable FHA loan.” “This opportunity allows only non-FHA insured loans to qualify for an FHA refinance loan provided that the lender or investor writes off the unpaid principal balance of the original first lien mortgage by at least 10 percent.” The changes | more...

October 24, 2012

FHA Loan Eligibility

By Joe Wallace

When a borrower applies for an FHA guaranteed mortgage, the lender is required to determine whether the borrower is a good risk by examining credit rating, the applicant’s debt-to-income ratio, and employment. But the lender also has some other checking to do. FHA loan rules state, “To determine whether a borrower is eligible to participate in an FHA mortgage loan transaction or must be rejected, the lender must: examine HUD’s LDP list, the GSA List and CAIVRS, and document the reviews on the HUD-92900-LT, FHA Loan Underwriting and Transmittal Summary.” What do all those abbreviations mean? “LDP” stands for “Limited Denial of Participation”. GSA is short for “U.S. General Services Administration List of Parties Excluded from Federal Procurement or Non-procurement Programs”. The acronym “CAVIRS” refers to “HUD’s Credit Alert Interactive | more...

October 15, 2012

FHA Streamline Refinance Loans: A Reader Question

By Joe Wallace

A reader asks, “I am curious about how to get a lower interest rate on my currently FHA backed SFR home loan. I have a 30-year fixed 5% interest rate and am trying to lower my monthly payments with the current low interest rates

October 10, 2012

FHA Loan Reader Questions: FHA Loans for Manufactured Homes and Land

By Joe Wallace

A reader asks, “Since FHA loan program includes Manufactured homes what about if you want to have your own land to put the house on. Will the loan cover the home and land?” Here’s a partial answer from the FHA official site: “HUD’s FHA program insures two types of mortgages. Title II insures mortgages on qualifying manufactured homes sold with land and meeting other requirements. FHA’s Title I program can provide information to consumers interested in obtaining HUD-insured loans. You may also want to contact lending institutions in your area (or the area where you want to purchase your home) for additional financing options.” The FHA Title II program mentioned above includes a requirement that the mortgage is intended for “both the manufactured unit and its site”. FHA Title II | more...

September 26, 2012

FHA Loan Rules: Occupancy Requirements

By Joe Wallace

A reader asks, “I purchased a home in 2006 with an FHA loan. At the time, I remember a stipulation that I was required to reside in the house, for three years (I believe), which I did.” “I have since moved and rented out the property, and just received a letter from my mortgage company that they had received word that my mailing address had changed, and that per the terms of my FHA loan, I was required to occupy the house until the mortgage was paid off, and that I may be facing tax penalties.” “They have asked me to sign a form verifying that I still occupy the house and will do so until the mortgage is paid in full. Are there any types of first time homeowners | more...