Articles Tagged With: Single Family Handbook 4000.1

November 2, 2016

HUD Brings Charges Against Ohio Housing Authority

The Department of Housing and Urban Development is bringing charges against the Ohio Housing Authority for what it says are violations of the Fair Housing Act. At first glance, a Fair Housing Act case against a state or local housing authority might not seem to have much to do with FHA mortgage loans, but the fact is that fair housing issues affect people at all levels of the home loan process, whether planning or actually purchasing. The family or individual that needs to rent, utilize public housing, or take other steps to find or use housing before purchasing a home is entitled to the same rights as those currently purchasing. Violations of those rights can negatively affect a potential borrower’s ability to find an purchase a home, which is why | more...

August 25, 2016

Identity Of Interest Transactions: Another Reader Question

By Joe Wallace

A reader asks, “I have a client that inherited property along with 2 siblings from the Mothers estate. The client has resided in the subject property for 1 year and now wants to buy the other siblings out. Is it correct, that this scenario would meet the exempt status of identity of interest guidelines?” The reader is asking this question in reference to an earlier post we wrote about FHA loans and identity of interest transactions. An FHA mortgage typically requires a minimum 3.5% down payment for new purchase loans. But the required down payment can be higher if there is an “identity of interest” as described in HUD 4000.1: “An Identity-of-Interest Transaction is a sale between parties with an existing Business Relationship or between Family Members. Business Relationship refers | more...

January 7, 2016

FHA Loan Rules For Up Front Mortgage Insurance Premiums (UFMIP)

By Joe Wallace

When you buy a home with an FHA mortgage, there’s a requirement to pay an Up Front Mortgage Insurance Premium or UFMIP. This is not to be confused with Private Mortgage Insurance (PMI), and according to the FHA loan rules published in HUD 4000.1 most FHA loans require UFMIP. “Most FHA mortgage insurance programs require the payment of UFMIP, which may be financed into the Mortgage. The UFMIP is not considered when calculating the area-based Nationwide Mortgage Limits and LTV limits.” There are exceptions as found in HUD 4000.1: –Streamline Refinance and Simple Refinance Mortgages used to refinance a previous FHA-endorsed Mortgage on or before May 31, 2009 –Hawaiian Home Lands (Section 247) –Indian Lands (Section 248) How is the UFMIP calculated? “The UFMIP charged for all amortization terms is | more...

December 4, 2015

FHA Adds Additional Temporary Guidelines For Condos

By Joe Wallace

The FHA and HUD eased certain condo guidelines earlier this year, and have since added a second round of temporarily eased “approval provisions” for condo projects to be added to the FHA approved list for single family home loans. According to an FHA mortgagee letter, both rounds of these temporarily eased guidelines are designed to help more people get into FHA condo loans. According to Mortgagee Letter 2015-27, “It is anticipated that the issuance of these additional temporary provisions will increase the pool of condominium projects eligible for FHA approval, thus increasing affordable housing options for first-time and low to moderate income homebuyers. The requirements of this Mortgagee Letter are applicable to all Title II programs including the Home Equity Conversion Mortgage (HECM) insurance program, unless otherwise stated.” One area | more...

October 7, 2015

FHA Loan Appraisal Rules: “Second Appraisal” Requests

By Joe Wallace

We get lots of questions about the FHA appraisal process in the comments section. Here is one of the most recent, which raises an important question about “replacement appraisals” or any request for a new appraisal that has to do with a dispute over valuation of the property. The reader asks, “I have a buyer who is buying a home. The home they are buying already had an appraisal completed. That deal fell through and my buyers offer was accepted. The sellers agent said that the original appraisal came in short and asked that we order a new one.” “He said his seller insists on a new appraisal because the original one done a few week before was less that the purchase price. Is is possible to request a new | more...

August 26, 2015

FHA Home Loans For Veterans

By Joe Wallace

There are many home loan options for veterans of the United States military, including the VA loan program. But some veterans choose the FHA home loan program instead–there are many reasons why some might choose FHA over a VA loan, and for those who are considering the option, there are some important things to remember about the FHA mortgage loan or refinance loan program. The first is that FHA home loans and refinance loans offer many similar features to VA loans. For example, veterans applying for an FHA mortgage have the option of getting an Energy Efficient Mortgage (EEM) option added to the loan, much in the same way as the VA loan program. An FHA EEM requires the lender and borrower to work together to determine the cost effectiveness | more...

July 31, 2015

FHA Loan Assumptions

By Joe Wallace

There are people on both sides of a potential loan assumption transaction–home owner and house hunter–who want to know if FHA home loans are assumable. Is it possible for a person who has purchased a home with an FHA mortgage loan to sign that loan over to someone else and allow them to assume responsibility for the loan and take ownership of the home? FHA loan rules say that loan assumptions are permitted for FHA single family home loans. Depending on when the loan was issued, there may be different requirements. For example, “If the loan application was signed by the borrower before December 1, 1986, the FHA-insured mortgage generally contains no restrictions on assumability.” That information is found in HUD 4155.2 Chapter Three and basically allows the loan assumption | more...

July 13, 2015

What You Should Know About FHA Loan Appraisal Fees

By Joe Wallace

Based on the reader questions we get in our comments section, there can be some confusion over the nature of FHA appraisals, appraisal fees, and compliance inspections. The appraisal process is an important part of the overall experience of buying a home with an FHA mortgage loan; borrowers should budget for appraisal fees and anticipate needing to pay for a compliance inspection (just in case). The appraisal process can include a required compliance inspection should the appraiser note conditions that must be corrected as a condition of loan approval. The compliance inspection requires a separate fee and when it’s time to budget for the appraisal process the borrower should assume the compliance inspection might be required. The amount of the appraisal fee and compliance inspection fee will vary depending | more...

June 29, 2015

FHA Loans: An Overview of the Process

By Joe Wallace

One of the most common questions about FHA loans involves the basic processes of the loan. What ARE the steps towards getting an FHA mortgage? Assuming that we’re discussing what happens once you have found a suitable home, as opposed to the planning stages for a loan (budgeting, researching, etc) the FHA loan rules in HUD 4155.2 actually have a list of steps that happen at each stage of the loan application process. These steps are found in Chapter One, Section A of HUD 4155.2. The process begins with the borrower getting in touch with the participating FHA lender and the lender determining if the borrower’s loan needs are eligible for FHA mortgage loan insurance. Step Two is described as, “The borrower, along with the lenders representative, completes the loan | more...

April 10, 2015

FHA Loan Rules: Student Loan Debt And Mortgage Applications

By Joe Wallace

A reader asks, “if I have a student loan with a 0 payment and can not get the payment what % will fha use for the student loan payment?” The answer to this question depends greatly on the status of the student loan. Is the student loan in deferment? And if so, for how long? FHA loan rules in HUD 4155.1 Chapter Four Section C state: “Debt payments such as a student loan or balloon note scheduled to begin or come due within 12 months of the mortgage loan closing must be included by the lender as anticipated monthly obligations during the underwriting analysis.” FHA loan rules in Chapter Four also add, “Debt payments do not have to be classified as projected obligations if the borrower provides written evidence that | more...