Articles Tagged With: Foreclosure

August 23, 2017

Can I Get An FHA Home Loan After Foreclosure?

Can I get an FHA loan after foreclosure? This is a question that comes up quite often. The answer depends on a variety of factors including the date that the foreclosed property was transferred out of the borrower’s name. The FHA loan handbook, HUD 4000.1, states that the FHA minimum requirements for getting a new loan following a foreclosure include a waiting period. This period, often called a “seasoning period” or “seasoning requirement” is normally three years. From HUD 4000.1: “A Borrower is generally not eligible for a new FHA-insured Mortgage if the Borrower had a foreclosure or a Deed-In-Lieu of foreclosure in the three-year period prior to the date of case number assignment.” The next line in that section is a crucial one: “This three-year period begins on the | more...

February 6, 2017

FHA Loans Following Short Sale Or Foreclosure

By Joe Wallace

Hands down, some of the most-asked questions we get in our comments section involve the FHA loan rules for borrowers who have a short sale or foreclosure on their credit record. It’s easy to assume that a new home loan isn’t possible after a short sale or foreclosure, but is this true? There are several factors that can determine whether a borrower is able to get a new loan or not under such circumstances, and it’s very important to remember that your credit activity, state law, lender standards, and your FICO scores will all play a role in whether a new loan can be approved or not. FHA loan rules often set benchmarks in this area but don’t have the final word when state law or lender standards also come | more...

August 30, 2016

FHA Announces Changes To Help Delinquent Borrowers Avoid Foreclosure

By Joe Wallace

The FHA has issued a press release announcing changes to its loss mitigation program guidelines to help borrowers avoid foreclosure and remain in their homes in times of financial difficulty. According to HUDNo.16-127, “The Federal Housing Administration (FHA) today announced new procedures to strengthen the process mortgage servicers use to help struggling families avoid foreclosure and remain in their homes. FHA is streamlining its loss mitigation protocols that servicers must use when evaluating and deploying home retention options, foreclosure alternatives that allow delinquent borrowers to retain their home.” By way of background, the FHA official site (in Mortgagee Letter 2016-14) explains, “The evolution of FHAs loss mitigation guidance has also led to improved consumer engagement, the streamlining of FHAs Pre-Foreclosure Sale option, and a new loan modification by which Mortgagees | more...

February 12, 2016

HUD Foreclosure Policy Updates: Reasonable Diligence and Delays

By Joe Wallace

Recently the FHA and HUD updated guidance to lenders with regard to foreclosures and the “reasonable diligence” required to make sure the foreclosure action happens in a timely manner. One of the biggest complaints about the foreclosure process is how long it can take for a financial institution or the entity that is to take possession of the property to do so. The new HUD guidelines require lenders to act in a reasonable time frame. According to mortgagee letter HUDNo.16-003, “…when foreclosure of a defaulted loan is necessary, mortgagees must exercise reasonable diligence in prosecuting the foreclosure proceedings to completion and in acquiring title to and possession of the property. However, the mortgagee letter adds: “When certain delays in completing foreclosure and acquiring possession are caused by circumstances beyond the | more...

February 11, 2016

FHA/HUD Alter FHA Loan Foreclosure Timeline Rules

By Joe Wallace

There have been many changes to FHA/HUD foreclosure policy. The latest of those changes comes via FHA Mortgagee Letter 2016-04, which adjusts the foreclosure timeline to comply with federal regulations known as Regulation X. According to the mortgagee letter, a previous mortgagee letter (2015-21) has been superseded in its entirety by this new set of guidelines. The new mortgagee letter “…provides updated guidance relating to HUDs regulatory requirement for mortgagees to utilize a loss mitigation option or initiate foreclosure within six months of the date of default. Specifically, this Mortgagee Letter: –reiterates the existing eight automatic extensions available to mortgagees when they are unable to initiate foreclosure within the allotted timeframe; and –introduces two new automatic extensions to align with the Consumer Financial Protection Bureaus Regulation X.” Specifically, “The Consumer | more...

February 9, 2016

HUD Updates Single Family Loan Foreclosure Policy

By Joe Wallace

One of the biggest complaints about the foreclosure process involves the length of time it can take for the lender to take ownership of a foreclosed property. This is important for many reasons, but delays in transfer of ownership can also result in delays in a borrower’s ability to become a property owner once more later down the line. The FHA and HUD have issued a mortgagee letter addressing this issue where FHA Title II and Reverse Mortgages are concerned. “Single Family Foreclosure Policy and Procedural Changes for HUD Title II Forward Mortgages and Reverse Mortgages” updates “Reasonable Diligence time frames” effective for all cases where the deadline for taking “First Legal Action to initiate foreclosure” occurs on or after January 1, 2016, according to the FHA/HUD official site. According | more...

November 30, 2015

FHA Loans After A Deed-In-Lieu Of Foreclosure

By Joe Wallace

A reader question came in recently asking about the possibility of getting an FHA home loan following a deed-in-lieu of foreclosure (DIL) action. “Is a deed-in-lieu derogatory on a credit report?” was one of the questions. The answer to that is that yes, a deed-in-lieu is considered a negative on your credit report. But FHA loans do offer some hope for borrowers who have since the deed-in-lieu established good credit once more. FHA loan rules in HUD 4000.1 cover the requirements in these circumstances for single-family “forward mortgages” after a deed-in-lieu of foreclosure, and those rules include mandatory waiting times or “seasoning periods” following the DIL. When can a borrower apply for a new FHA home loan after a deed-in-lieu? According to HUD 4000.1: “A Borrower is generally not eligible | more...

July 8, 2015

FHA Loans and Foreclosure Avoidance

By Joe Wallace

FHA loan applicants don’t find a home, apply for the loan, and close the deal expecting to miss mortgage payments or get behind on their home loans. But the borrower who understands that it’s a possibility some time down the road and prepares for that contingency has a much better chance of making the best of the situation. Sometimes a little knowledge in advance of such problems can go a long way toward fixing them and making the entire experience easier to manage. Do you know what to do in case you fall behind on an FHA home loan? The FHA, HUD and the Consumer Financial Protection Bureau all have resources you should know about well in advance of any problems–knowing they are there will make the job of getting | more...

April 17, 2015

FHA Home Loans: What Is CAIVRS?

By Joe Wallace

In our last post, we answered a reader question about trouble with an FHA home loan associated with information found in the CAIVRS system. One of the important aspects of that reader question is the definition of what CAIVRS is and how data found in that system could affect an FHA mortgage loan application. The FHA official site has a Frequently Asked Questions section that addresses CAIVRS, which stands for Credit Alert Verification Reporting System. This is a system maintained by the federal government that, as the FHA official site explains, “lists persons who have defaulted or had a loan foreclosed within the last three years on a debt owed to the Federal government or are currently delinquent on a debt owed to the Federal government.” Examples of what the | more...

October 3, 2014

FHA Loans After Bankruptcy and Foreclosure: A Reader Question

By Joe Wallace

A reader got in touch with us recently with a lengthy question. We won’t run the entire correspondence, but the question goes as follows: “I filed Bankruptcy over 3 years ago and it was discharged in June of 2011. Included in that Bankruptcy was the current house we had purchased. On my credit report it clearly shows that the loan to that property was part of the bankruptcy and was discharged in June of 2011. We are trying to buy again under an FHA Loan and we were almost done when the underwriter found that the deed to the property we included in the bankruptcy did not get changed out of our name and into the bank’s name until…22 months later.” “We were denied financing because that only left us | more...