Articles Tagged With: FHA Updates

July 28, 2014

FHA Streamline Refinancing Loans and Delinquent FHA Mortgages

In our last blog post we examined FHA loan rules for skipped payments and delinquent mortgages with regard to an FHA refinance loan. HUD 4155.1 Chapter Three addresses these issues in general, stating the FHA requirement that, “The borrower must be current on the loan being refinanced for the month due prior to the month in which he/she closes the refinancing, and for the month in which he/she closes.” But what does the FHA loan rulebook specifically say about delinquent payments on mortgages to be refinanced with an FHA Streamline Refinance loan? HUD 4155.1 Chapter Six Section C states, “A delinquent mortgage is not eligible for streamline refinancing until the loan is brought current.” That means that skipped payments are not allowed, and the delinquency issue must be addressed as | more...

July 25, 2014

Missing Payments On FHA Loans Prior To Refinancing

By Joe Wallace

One common question about FHA refinance loans involves skipping payments. The ability to skip a payment prior to getting a refinance loan seems like an attractive option to many borrowers, and for those who have become delinquent on home loans. But does the FHA allow skipping payments? How do FHA loan rules address delinquent accounts that are being refinanced? HUD 4155.1 Chapter Three addresses these issues in general, stating: “The borrower must be current on the loan being refinanced for the month due prior to the month in which he/she closes the refinancing, and for the month in which he/she closes.” To clarify, Chapter Three, Section A of HUD 4155.1 provides the following example for us to review: “If the borrower is closing on April 8, he/she must have made | more...

July 25, 2014

FHA Loan Rules For Refinancing and Reverse Mortgages: A Reader Question

By Joe Wallace

A reader asks, “We were told to get a reverse mortgage, while applying for a reverse mortgage my husband was under the impress that we did not have to make a mortgage payment. He did not make 2 payments. We have never misses a payment including the 28 years we owned our first home. The person who recommend the reverse mortgage did not explain. explain the process to us, once the paper work was competed he told us that we had to pay 85 thousand dollars in order to get a reverse mortgage, which came as a shock to us and since we could not afford it we dropped out of the program.” “Now we need to defiance as our mortgage is $1250. a month and our condo fee is | more...

July 24, 2014

FHA, HUD Announce Settlement In Housing Discrimination Case

By Joe Wallace

The FHA and HUD have announced a settlement in a New Hampshire housing discrimination case. According to HUDNo.14-089, a tenant filed two housing discrimination complaints against TKB Properties and the New England Family Housing Management Organization. Those complaints were settled and the settlement announced in the HUD/FHA press release. “The U.S. Department of Housing and Urban Development (HUD) announced today agreements with the owners and managers of two Berlin, New Hampshire properties, settling allegations that they engaged in housing discrimination when they refused to rent to a woman who was a victim of domestic violence. The Fair Housing Act makes it unlawful to discriminate in the sale or rental of housing because of race, color, national origin, religion, sex, disability, or familial status.” “No woman should be denied housing based on | more...

July 23, 2014

FHA Loan Income Requirements: A Reader Question

By Joe Wallace

A reader asks, “My spouse is waiting an immigration process. Is there any way we can count all or partial income? My credit is at $800 and we have no other debts.” This is a difficult question to answer without knowing more. The big question is whether the spouse income is verifiable or not–FHA loan rules require all income to be used in the debt to income ratio calculation (which is an important part of the loan approval process) to be verifiable. What does this mean? Verifiable income is defined as earnings that are stable, reliable, and likely to continue. Verifiable income is not always “taxable income”–veteran benefits, for example, may be counted as income even though they are tax-exempt. But some types of income can’t be used. Non-verifiable income | more...

July 22, 2014

FHA Loans And Escrow Requirements: A Reader Question

By Joe Wallace

A reader asks, “I am trying to cancel my escrow acct. with (my lender) due to them selling my Mortgage loan to an undesirable finance company called (name deleted). I was informed that all FHA loans are required to have an Escrow account. Please inform me of my rights.” FHA loan rules do not require an escrow account in every case, but your lender might. According to the FHA/HUD official site, we find the following on the page titled HUD RESPA FAQs. The Real Estate Settlement Procedures Act, also known as RESPA, governs escrow accounts for home loans. Under RESPA there is no requirement for escrow. From the HUD official site: “Does RESPA require borrowers to maintain an escrow account? NO. It is the lender’s decision whether the borrower must | more...

July 17, 2014

FHA No Cash-Out Refinances With Appraisal Required Part 2

By Joe Wallace

In our last blog post we discussed some of the basic rules for FHA no-cash out refinances with an appraisal required. Those guidelines include rules on how lenders are to deal with subordinate liens such as a home equity line of credit, and what can be done when a borrower needs to buy out an ex-spouse or co-borrower’s equity in the property. HUD 4155.1 covers these rules in Chapter Three. For subordinate liens, FHA loan rules for this type of refinancing are clear: “A subordinate lien, including a Home Equity Line of Credit (HELOC), regardless of when taken, may remain outstanding (but subordinate to the FHA-insured mortgage), provided the • FHA insured mortgage meets the eligibility criteria for mortgages with secondary financing outlined in HUD 4155.1 5.C, and • combined | more...

July 16, 2014

New FHA HECM Deferral Period Rules Take Effect August 4 2014

By Joe Wallace

Recently the FHA and HUD updated requirements to the FHA Home Equity Conversion Mortgage (HECM) program to include something known as a deferral period for surviving non-borrowing spouses of those with HECM loans. What does this mean? According to the FHA official site, “For any HECM with a case number issued after the effective date of this Mortgagee Letter, in order to be eligible for FHA insurance, the HECM must contain a provision deferring the due and payable status that occurs because of the death of the last surviving mortgagor, if a mortgagor was married at the time of closing and the Non-Borrowing Spouse was identified at the time of closing.” “Specifically, the HECM documents must contain a provision deferring due and payable status until the death of the last | more...

July 14, 2014

FHA and HUD Update Deed-In-Lieu and Pre-Foreclosure Sale Rules

By Joe Wallace

The FHA and HUD have issued a Mortgagee Letter updating the requirements for Deed-In-Lieu and Pre-Foreclosure sales for borrowers at risk of going into default on FHA home loans. Mortgagee Letter 2014-15, Updated Requirements for Pre-Foreclosure Sales (PFS) and Deeds in Lieu (DIL) of Foreclosure, completely updates and supersedes the previous FHA mortgagee letter in these areas. The new regulations could in some cases be implemented right away if participating lenders choose to do so, but FHA/HUD requirements state these rules will be in effect for all lenders as of October 1, 2014. The new guidelines include alterations or modifications of existing policy including the following as listed in the mortgagee letter: –Requirements for real estate agents and brokers participating in PFS transactions; –An initial listing period requirement for PFS | more...

July 11, 2014

FHA Loan Reader Questions: Deed-In-Lieu of Foreclosure Waiting Times

By Joe Wallace

A reader asks, “My wife and I completed our deed in lieu of foreclosure in May 2012. We’ve been renting since and saving a lot for a down payment on a future home. I’ve heard mixed statements from various institutions and real estate agents – exactly how long after we complete the deed in lieu, can we approach a bank for a pre-approval on a new loan?” In 2012, the Department of Housing and Urban Development held a webinar on FHA loan credit underwriting. HUD published notes from that webinar that were made available from HUD.gov as a downloadable PDF file which included a section that specifically addresses this type of reader question. According to the section titled,”Foreclosure/Deed in Lieu” we learn the following FHA stance on the waiting time | more...