Articles Tagged With: Single Family Handbook 4000.1

December 14, 2011

FHA Energy Efficient Mortgage Loans Part Two

In a recent blog post we discussed the FHA Energy Efficient Mortgage Loan (EEM) and some of the basics of the program. The FHA EEM is for new purchase and refinancing mortgages and lets the borrower finance additional costs of energy-efficient upgrades or improvements to the home. Because the FHA loan program has loan limits and specific rules that govern those limits, it is easy to see how borrowers new to the FHA loan program could be confused by the terms of such a loan. After all, if a borrower can add at least $4,000 (or as much as $8,000 depending on the circumstances) to the FHA loan, how does one roll the costs of the improvements into the mortgage without exceeding the FHA loan limit for that purchase? According | more...

December 1, 2011

FHA Loans: How Lenders Evaluate Non-Traditional Credit

By Joe Wallace

In a recent blog post we answered a reader question about FHA home loans and non-traditional credit. Can an FHA loan applicant qualify for an FHA home loan even if they have limited credit history or a history of non-traditional credit? The short answer is yes–after all, not all FHA borrowers choose to apply for credit cards, some buy their vehicles in cash, and don’t have many of the credit needs that others do. The reader asked, “would the FHA look at our utility bill payment history instead of credit history?

November 22, 2011

FHA Loans, Escrow Accounts, and the Real Estate Settlement Procedures Act

By Joe Wallace

If you’re new to the home buying process, chances are good you’re learning plenty of new things about banking, the loan process, and escrow accounts. An escrow account is often required by lenders as part of an FHA home loan in order to pay property taxes, home insurance and other required expenses. But what are the rules governing escrow and what should the borrower know? To begin, the Real Estate Settlement Procedures Act or RESPA states that escrow is NOT mandatory as a condition of applying for an FHA home loan. That said, the lender is free to require an escrow account–but the FHA does not insist upon one. When a lender does require money to be held in escrow, the financial institution is limited by RESPA–there’s a maximum calculation | more...

November 8, 2011

Credit Report Requirements for FHA Home Loans

By Joe Wallace

To be processed by a lender, FHA home loan applications require detailed credit information from the three major credit reporting agencies. The lender uses these reports to determine that an FHA loan applicant meets the minimum credit requirements for a FHA home loan. Those requirements include the FHA minimum credit score and any additional credit score requirements set by the lender. The FHA minimum credit score must be above 500, but lenders frequently require scores at 620 or better. In order to get this credit score information, the lender can’t simply check–there is a specific set of procedures required for a credit check to “count” as an official representation of an FHA loan applicant’s credit worthiness. For example, the FHA rules say the credit data must come directly from the | more...

November 2, 2011

HUD Suspends Allied Home Mortgage Corporation

By Joe Wallace

Allied Home Mortgage Corporation is no longer allowed to do business with the FHA or HUD, according to a November 1, 2011 press release from the Department of Housing and Urban Development. “The U.S. Department of Housing and Urban Development

October 25, 2011

FHA Loans and Non-Purchasing Spouses

By Joe Wallace

One FHA loan frequently asked question relates to married FHA borrowers with non-purchasing or non-occupying spouses. When an FHA borrower applies for a loan and the spouse does not co-sign or co-borrower, are there situations where the spouse could be required to sign the loan? According to FHA loan rules, this issue depends greatly on state law. The FHA itself has no requirement for a non-borrowing spouse to sign, but states which require certain types of documentation for “valid and enforceable” loans could need a signature from the non-borrowing spouse. But what kind of signature? In these cases, the state law usually requires a signature to indicate the non-borrowing spouse’s status in connection with the loan. The non-borrower isn’t obligated by law to become financially responsible–just to state they are | more...

October 20, 2011

Does the FHA Provide Down Payment Assistance?

By Joe Wallace

Recently we posted about FHA rules for down payments. For all FHA new purchase home loans, there is a minimum down payment of 3.5%. Borrowers are required to make this down payment above and beyond any closing costs and related fees that may be required to be paid up front. Some borrowers may have a difficult time coming up with cash to make down payments, and while the FHA does allow loan applicants to borrow money for a down payment, it must come from a third party with no financial interest in the FHA insured loan transaction and must be secured by “real property” rather than a credit card cash advance or signature loan. Some borrowers ask if the FHA also offers a down payment assistance program to help borrowers | more...

October 17, 2011

FHA Property Appraisals Vs. Home Inspections

By Joe Wallace

A recent reader question came in about FHA appraisals. “How do I file a complaint about a lemon home? It was inspected by an FHA approved inspector.” This question raises two very important issues. Does the FHA “inspect” properties? If not, who does? The FHA requires an appraisal before an FHA loan will be approved and can move to closing. The appraisal is designed to insure the property meets minimum standards, is safe and livable, and the appraisal also establishes a fair market value. But an FHA appraiser is not an inspector. The FHA appraisal process is not designed to guarantee the home is free from defects or problems. The appraisal process does not guarantee your home is problem-free. Before a borrower commits to purchasing the home, or as a | more...

October 14, 2011

HUD Suspends Former Lend America President Michael Primeau

By Joe Wallace

The FHA and HUD have announced the suspension of Michael Primeau, former President of Lend America, following Primeau’s guilty plea in a loan fraud scheme. Primeau is no longer permitted to conduct business with the FHA or HUD. According to a press release at FHA.gov, “The U.S. Department of Housing and Urban Development (HUD) today announced it is immediately suspending Michael Primeau, former President of Lend America, from doing any business with HUD following his admission that he engaged in a wide-scale mortgage fraud scheme.” “Specifically, Primeau pled guilty to charges he directed employees of Lend America, a former FHA-approved lender, to divert mortgage funds intended to pay off borrowers

September 30, 2011

FHA Loans: Approved and Non-Approved Properties

By Joe Wallace

FHA loans for single family, new purchase properties have a set of requirements and regulations covering the types of homes that can be purchased with an FHA insured mortgage. Many people envision a traditional suburban home when thinking of buying property with an FHA mortgage, but FHA-approved condo projects, town homes, row houses, and even detached (or semi-detached) housing can be approved for an FHA loan if the property meets the right standards. Sometimes the phrase “single-family home” misleads a potential FHA borrower into thinking they can only purchase single unit properties. But according to the official site, “FHA’s single family programs are limited to one- to four-family properties that are owner-occupied principal residences. The key to being able to purchase a multi-unit property (capable of housing up to four | more...