Articles Tagged With: FHA Requirements

February 13, 2014

FHA Loan Questions: Electronic Signatures

Ever since the FHA announced a wider acceptance of electronic signatures, some borrowers have had questions about the nature of this policy and what documents the FHA’s e-signature guidelines are applicable to. In FHA Mortgagee Letter 2014-03, it was announced that on certain documents not already approved for e-signatures, the electronic version of a borrower’s signature would be recognized the same as a traditional one. But the FHA e-signature policy doesn’t extend to the actual mortgage note itself (in some cases at the time of this writing). Which documents DOES the new policy allow e-signatures on? According to the mortgagee letter: “Unless otherwise prohibited by law or excepted below, FHA will accept electronic signatures on the documents referenced below (collectively referred to as “Authorized Documents”), provided that the mortgagee complies | more...

February 12, 2014

FHA Loan Reader Questions: Down Payments and Bankruptcy

By Joe Wallace

We’ve gotten plenty of reader questions lately on the subjects of down payments, bankruptcy, and eligibility for FHA home loans. Here’s one: “Is there any company that will finance a small condo without a down payment. Thank you” And here’s another: “My wife and I surrendered our home thru a chapter 13. The chapter 13 was a 100% repayment plan that was successfully discharged in December of 2013…We have entered into a lease option home purchase and would like a straight answer on how long of a “waiting period” we must endure before we are able to finance a home again? We also have about $80K in sweat equity against an agreed upon purchase price of $270K. What type of down payment can we expect to need?” FHA loan rules | more...

January 29, 2014

FHA No-Cash Out Refinancing Loans (With Appraisal): Basic Rules

By Joe Wallace

There are plenty of reasons to refinance a home with an FHA no-cash-out refinancing loan–taking advantage of lower interest rates is one of those good reasons, as is getting into a lower mortgage payment. The FHA offers a variety of refinancing options for single family home loans–what are the basic ground rules for an FHA no-cash-out refinancing loan? For starters, the amount that can be refinanced is, according to HUD 4155.1 Chapter Three Section B, “is the lesser of the 97.75% Loan-To-Value (LTV) factor applied to the appraised value of the property, or existing debt. The total FHA first mortgage is limited to 100% of the appraised value, including any financed upfront mortgage insurance premium (UFMIP).” Chapter Three adds that in general, the maximum mortgage cannot exceed the “statutory limit, | more...

January 24, 2014

FHA Loan Reader Questions: Employment Requirements

By Joe Wallace

A reader asks, “Can a borrower get a FHA loan with less than two years of employment? She has a full time and part time job. However she has only been employed for 6 months on each job.” Let’s examine what FHA loan rules say about this subject. FHA requirements for employment verification are found in HUD 4155.1. In Chapter One, Section B we learn: “The lender is required to verify the applicant’s employment history for the previous two years. For the most recent two years the lender must obtain • copies of W-2s • written VOEs, or • electronic verification acceptable to FHA.” But what about in cases where employment can’t be verified for two years? And do the rules require the applicant to be on the job with | more...

January 10, 2014

FHA Loan Approval and Evictions: A Reader Question

By Joe Wallace

A reader asks, “I was ‘renting to own’ a house from a close family friend. For 3 years, I paid her mortgage payment and all household repairs/maintenance. She then decided after her parents death to move back to our home state and ultimately take her home back. I started working with a lender who said I qualified for an FHA loan…My ‘landlord’ or family friend only wanted to give me 4 weeks to move out after announcing that she changed her mind and wanted her house back, and there was no way I could do that. I ended up needing 6 weeks, but was just made aware that she filed a rule of evict w/ the local magistrate court…” “…Now my lender called me and says he can’t help me | more...

January 2, 2014

FHA Minium Property Requirements: A Reader Question

By Joe Wallace

A reader asks, “What are the property condition requirements for an FHA loan? For example, what if the home is older and has a main panel of the fuse type instead of the newer circuit breaker type – are those okay if they as long as they pass inspection? Does the roof need to be certified if it is not new? Is there a publication I can reference for this type of information?” FHA loan minimum property requirements are just that–minimums. State or local building codes also apply, so it’s important to check with the local authority for specifics on things like circuit panels, carpet and roof requirements. The FHA has general minimum property requirements listed in Chapter 12 of HUD 4155.1, but for detailed information, the local authority must | more...

December 30, 2013

FHA Extends Deadline For 2014 Loan Limit Appeals

By Joe Wallace

The FHA has announced an extended deadline for appeals to the 2014 FHA loan limits for high cost areas. According to an announcement dated December 20, 2013, the FHA will allow “interested parties” in high-cost areas to submit an appeal until the end of January 2014. “On December 6, 2013, the Federal Housing Administration (FHA) issued Mortgagee Letter 2013-43 which announced FHA’s loan limits for case numbers assigned on or after January 1, 2014 through December 31, 2014. FHA is extending the date for interested parties to request a change to high cost area loan limits announced in ML 2013-43 from January 6, 2014 to January 31, 2014.” However, the appeal process is not open to all high cost areas. According to the FHA/HUD announcement, “Requests for a change to | more...

December 19, 2013

FHA Loan Questions: Credit History–What Counts?

By Joe Wallace

We get a number of reader questions about FHA home loans, and many of those include questions about credit history. Does the presence of a few late payments on a borrower’s credit history jeopardize an FHA loan application? In general, it’s best to come to the FHA loan process with at least 12 months of on-time payments on your record, but we should examine the FHA loan rulebook (HUD 4155.1) to see what instructions are given to participating FHA lenders about credit history. These instructions can be found in Chapter Four, Section C of HUD 4155.1. They include the following, found under the heading “Documenting an Analysis of Delinquent Accounts”: “The lender must document the analysis of delinquent accounts, including whether late payments were based on • a disregard for | more...

December 12, 2013

FHA Loan Credit Score Rules: A Reader Question

By Joe Wallace

A reader asks, “If my credit score is currently between 618 and 630 why can’t I qualify for a loan? Does it have to be 700?” The answer to this question may not be as simple as citing FHA loan policy on credit scores, but it’s a good place to begin. Credit score minimums, according to the FHA loan rules found in HUD 4155.1, are as follows: These are MINIMUMS found in the FHA loan rulebook, and there’s nothing that says a lender cannot require a higher minimum score as long as those requirements are applied in accordance with Fair Housing Act laws. But credit scores alone don’t determine whether a borrower is eligible for an FHA home loan. Credit repayment history is also a factor. If a borrower comes to | more...

December 12, 2013

FHA 2014 Loan Limits

By Joe Wallace

Recently we covered the FHA and HUD’s press release announcing changes in FHA loan limit policies. FHA loan limits have been changed in accordance with laws passed in 2008, which did not become effective until this year with regard to FHA loan limits. At the same time the FHA issued the press release announcing the changes, it also published a mortgagee letter describing the 2014 “floor” and “ceiling” for low-cost areas and high-cost housing markets, respectively. According to FHA Mortgagee Letter 2013-43, “The minimum FHA national loan limit “floor” is at 65 percent of the national conforming loan limit (which is $417,000 for a one unit property for the period January 1, 2014 through December 31, 2014). The “floor” applies to those areas where 115 percent of the median home | more...