Articles Tagged With: Single Family Handbook 4000.1

February 15, 2013

Minnesota Condo Association Settles Housing Discrimination Complaint

A recent press release issued on the FHA/HUD official site announces a settlement in a housing discrimination case. According to HUDNo.13-026, “The U.S. Department of Housing and Urban Development (HUD) announced today that a homeowners association and property managers for an Edina, MN, condominium will pay more than $40,000 under a Consent Order resolving allegations that they refused to allow children under the age of 18 to live at the property in violation of the Fair Housing Act.” The release adds, “According to a condominium owner’s complaint filed with HUD, the condominium association told him and his wife that they were violating the association’s document by allowing their minor children to live with them for more than 30 days in a calendar year. In addition, the condominium association levied fines | more...

February 6, 2013

FHA Loan Rule Changes

By Joe Wallace

The FHA has issued several rule changes recently including alterations to the FHA HECM and HECM Saver programs, new guidelines for mortgage insurance, and also the procedures for how some FHA loan applications must be processed with credit scores and debt-to-income ratios that exceed certain new guidelines. For example, FHA refinance loans for borrowers with negative equity in their homes have new guidelines which state, “Refinances of Borrowers in Negative Equity Position where the borrower has a decision credit score below 620 and the debt-to-income ratio exceeds 43.00% must be manually underwritten.” The same is true in cases of FHA Energy Efficient Mortgages. New FHA rules state, “While Energy Efficient Mortgages where the borrower has a decision credit score below 620 and the debt-to-income ratio exceeds 43.00% must be manually | more...

January 28, 2013

FHA Loan Reader Questions: First Time Home Buyers and Down Payments

By Joe Wallace

A reader asks, “Is it true the first time buyer with an FHA Loan can purchase the home with no money down?” The FHA loan program is similar in some ways to another government-backed loan program–VA loans. VA guaranteed loans are for eligible veterans and feature a no-down payment option unique to that program. FHA home loans, which are also government guaranteed mortgage loans issued by a private lender, do not feature a no downpayment option. According to FHA home loan rules as described in Chapter Two of HUD 4155.1, says the following about down payments on FHA loans in a section titled Maximum Mortgage Amount For A Purchase: “The maximum mortgage amount that FHA will insure on a purchase is calculated by multiplying the appropriate loan-to-value (LTV) factor by | more...

January 10, 2013

FHA Streamline Refinance Loans Without An Appraisal

By Joe Wallace

FHA Streamline loans are described in the official rules (HUD 4155.1) as follows: “Streamline refinances • are designed to lower the monthly principal and interest payments on a current FHA-insured mortgage, and • must involve no cash back to the borrower, except for minor adjustments at closing, not to exceed $500.” The no-cash-out rule makes FHA Streamline Refinance loans different than cash-out refinances. Streamline loans may be done with or without an appraisal. According to FHA loan rules, when a Streamline Refinance is done without an appraisal, the following applies: “Generally, the streamline refinance mortgage amount may never exceed the statutory limits, except by the amount of any new upfront mortgage insurance premium (UFMIP). However, the maximum mortgage may exceed the statutory limits on certain specialty products.” Additionally, there are | more...

January 9, 2013

FHA Loan Reader Questions: Can Another Homeowner Co-Sign My Loan?

By Joe Wallace

A reader asks, “Can my mother co-sign an FHA mortgage for me even if she has a veteran’s loan for her home? Will they use my credit, or just hers, or both? I am confused. My credit is not so good but she is willing to help so I don’t know…” FHA loans require credit, income and employment data on all parties financially obligated on the mortgage. What specifically does the FHA require from co-signers or co-borrowers? Here’s some information from the FHA official site, which states: “Co- borrowers take title to the property and are obligated on the mortgage note and must also sign the security instrument. The co-borrower’s income, assets, liabilities, and credit history are considered in determining creditworthiness.” Additionally, “Co-signers do not hold ownership interest in a | more...

January 4, 2013

Bank Of America Settles In FHA Sexual Orientation Discrimination Case

By Joe Wallace

A press release issued on January 2, 2013 announces a settlement between the Department of Housing and Urban Development and Bank of America regarding a discrimination case filed by the government. According to HUDNo.13-001, “The U.S. Department of Housing and Urban Development today announced an agreement with Bank of America (BOA) to settle a claim that the mortgage lender refused to provide financing to a lesbian couple. The agreement is the first enforcement action taken against a lender involving HUD’s recent rule ensuring that the Department’s core housing programs be open to all eligible persons, regardless of sexual orientation, gender identity, or marital status.” The case involves alleged violations of the HUD rule “Equal Access to Housing in HUD Programs Regardless of Sexual Orientation or Gender Identity” which prohibits lenders from | more...

December 26, 2012

FHA Loan Applications: What Your Loan Officer Needs

By Joe Wallace

FHA loan applications are designed to give the lender the information needed to start the approval process. It’s true that a loan application can be lengthy–it’s a major line of credit, after all. What does the bank need from the borrower to move forward? The application is designed to help the lender obtain a range of details including: • general mortgage credit analysis documents • evidence of Social Security Number • verification of deposit • verification of employment (VOE) • federal income tax returns, and • appraisal documentation. That’s reprinted from the FHA loan rulebook for lenders, HUD 4155.1, which adds, “Lenders must obtain the most recent documents required to perform the mortgage credit analysis. “Most recent” refers to the most recent document available at the time the loan application | more...

December 21, 2012

Can A House Seller’s Appliances Reduce The Amount of My FHA Loan?

By Joe Wallace

When you want to buy a home with an FHA loan, unless you’re having a house built to spec, chances are good that appliances like a washer/dryer, stove, refrigerator and other items could be included in the purchase. In some cases this is not a problem, but depending on what the buyer and seller agree will “come with the house” as part of the purchase, could such items reduce the amount of your FHA loan? There’s an FHA loan rule about something known as an “inducement to purchase”. A seller is permitted to make a contribution to some financial aspects of the FHA loan (but not the down payment) in order to make the deal more attractive. Those contributions are limited as part of “the six percent rule”. According to | more...

December 5, 2012

New Hampshire Gets FHA/HUD Hurricane Sandy Relief

By Joe Wallace

New Hampshire is the latest state to receive FHA/HUD relief in the wake of Hurricane Sandy. On Monday, December 3 2012, the FHA and HUD issued a press release announcing foreclosure relief, FHA loans and refinancing plus other help for those recovering from storm damage. According to HUDNo.12-184, “U.S. Housing and Urban Development Secretary Shaun Donovan today announced HUD will speed federal disaster assistance to the State of New Hampshire in addition to resources being provided by FEMA and other federal partners. HUD will provide support to homeowners and low-income renters forced from their homes due to Hurricane Sandy.” Some may wonder why at takes time for all areas to get such disaster assistance from the FHA and HUD. The answer is simple–these benefits become available once an affected region | more...

November 28, 2012

FHA Loans For Older Homes: A Reader Question

By Joe Wallace

A reader asks, “Can a borrower use an FHA loan for homes built in 1957?” We get many similar questions about FHA loan rules–does the FHA have any regulations that specify a home’s age as a factor in FHA loan approval? Not specifically. Instead, the FHA has guidelines that must be followed for the condition of the property–it must meet FHA minimum property standards and be compliant with state and local building code as applicable. There’s no single, centralized standard that can be cited for the age of a property; the FHA requires the home be safe, habitable, and meet other general requirements. One important factor to consider when viewing any property as a potential home is the property’s “remaining economic life”. A lender (or FHA rules) may preclude the | more...