Articles Tagged With: Home Equity Loan

January 21, 2016

Qualifying For An FHA Reverse Mortgage

One commonly asked question about the FHA home loan program is whether or not FHA insures or guarantees reverse mortgages. The FHA does have a reverse mortgage loan program, called the Home Equity Conversion Mortgage or HECM for short. Who qualifies for an FHA HECM loan and what are the basic ground rules? To start, it’s very important to understand the difference between an FHA HECM loan and traditional refinancing. According to the FHA official site, “A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that you built up over years of making mortgage payments can be paid to you.” FHA HECM loans are not like standard home equity loan or second mortgage | more...

January 14, 2016

FHA HECM Loan Facts

By Joe Wallace

The FHA single-family loan program includes reverse mortgages–a loan program where a borrower can apply for a loan that requires no monthly payments, offers cash back to the borrower, and is based on the value and equity in the home. If you are looking for a reverse mortgage, the FHA program might be just what you need. Here are some basic facts about the FHA reverse mortgage loan option: FACT: FHA reverse mortgages are known as Home Equity Conversion Mortgages or HECM for short. These two terms refer to the same thing when it comes to FHA reverse mortgages. FACT: FHA HECM loans are for borrowers aged 62 or older who either own their home outright or are very close to doing so. HECM loans are declared due when the | more...

Can I buy a manufactured home with an FHA loan?

December 16, 2015

FHA Forward Loan Limits For 2016

By Joe Wallace

Recently we wrote about a press release issued by the FHA and HUD announcing FHA loan guaranty limits for the coming new year. The FHA has published two sets of loan limits mortgagee letters–one for Home Equity Conversion Mortgages (FHA HECM loans) and the other for FHA single-family “forward loans”. We covered the FHA HECM loan guaranty limits in a previous blog post; now we turn our attention to the specifics of the FHA forward mortgage loan guaranty limits as published in Mortgagee Letter (ML) 2015-30, which begins by explaining how FHA loan limits are set. According to that mortgagee letter, “The Federal Housing Administration (FHA) calculates forward mortgage limits based on the median house prices in accordance with the National Housing Act. FHAs Single Family forward mortgage limits are | more...

December 14, 2015

FHA HECM Loan Limits For 2016

By Joe Wallace

The FHA has published the new mortgage loan guaranty limits for FHA Home Equity Conversion Mortgages for 2016. According to FHA Mortgagee Letter 2015-29, the new limits take effect for all FHA HECM loans with FHA case numbers assigned on or after 1 January 2016. According to the Mortgagee Letter, the 2016 limits are as follows: “For the period January 1, 2016 through December 31, 2016, the maximum claim amount for FHA-insured HECMs will remain $625,500 (150 percent of Federal Home Loan Mortgage Corporations (Freddie Mac) national conforming limit of $417,000). This maximum claim amount of $625,500 is also applicable to Freddie Macs special exception areas: Alaska, Hawaii, Guam, and the Virgin Islands.” FHA publishes new loan guaranty limits every year, making adjustments where necessary for housing market changes and | 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...

When Is An FHA Loan Better Than A Conventional Loan?

October 27, 2015

FHA HECM Loans And Mandatory Counseling

By Joe Wallace

FHA HECM loans–home equity conversion mortgages, sometimes known as “reverse mortgages”–come with a requirement for all borrowers to be obligated on the FHA HECM to go through HECM loan counseling. This is not a requirement for other types of FHA mortgages, which leads some to wonder why FHA HECMs have this feature. Why do the borrowers have to complete FHA required counseling sessions as a condition of the loan? There are many reasons. Since HECM loans feature no monthly payments, cash back to the borrower, and specific requirements for that cash back, counseling is necessary for the applicants to know exactly what they can and cannot get with their HECM loans. This FHA loan program has changed a great deal in the last two years, and the terms and | more...

August 5, 2015

FHA Condo Loans: Site Condos and Manufactured Housing Condo Projects

By Joe Wallace

In our last post we discussed basic eligibility rules for FHA condo loans–a condo project must be on or added to the FHA approved list in order to be approved for an FHA mortgage. But there are additional rules in some cases. For example, site condo projects don’t require being added to the FHA approval list IF those condo projects meet certain requirements. These requirements may vary depending on the nature of the condo project, state law, and other factors. The FHA condo project requirements are found in a PDF file you can download directly from the FHA/HUD official site. It contains the following provisions for site condos: Condominium project approval is not required for Site Condominiums meeting all of the below defined requirements. Site Condominiums are defined as: –Single | more...

August 3, 2015

FHA Reverse Mortgages and the FHA Back To Work Progam

By Joe Wallace

A reader got in touch with us recently about the FHA’s Back To Work program, which was announced in 2013 as a way for lenders to offer FHA mortgage loans to people who have had financial hardship in the past that might otherwise disqualify them from a home loan. Back To Work requires the borrower and lender to work together to document the causes of a pre-foreclosure sale, foreclosure, bankruptcy or other financial hardship to show that the issue was circumstantial and not representative of a borrower’s actual credit worthiness. The following guidance to lenders is from FHA Mortgagee Letter 13-26: “As a result of the recent recession many borrowers who experienced unemployment or other severe reductions in income, were unable to make their monthly mortgage payments, and ultimately lost | more...

July 3, 2015

FHA Home Loans: Pre-Purchase Counseling, HECM Loan Counseling

By Joe Wallace

We often write posts that encourage borrowers to examine their pre-purchase counseling options before starting on the journey to apply for an FHA mortgage loan. We also write posts for eligible Home Equity Conversion Mortgage (HECM) loan applicants discussing HECM loan counseling. Some borrowers might wonder what the difference is between the two. There are some obvious differences. HECM loans are a type of refinancing loan for eligible borrowers aged 62 and older that requires no monthly payments and comes due when the borrower dies or sells the home. FHA single family home “purchase loans” are for borrowers looking to buy a home with an FHA guaranteed mortgage. So up front, many of the concerns a borrower has with a new purchase loan differ greatly than those for any refinance | more...

June 22, 2015

FHA HECM Loan Changes To Non-Borrowing Spouse Policies

By Bruce Reichstein

Last week we discussed some recent changes to FHA HECM loan policies. There have been a number of updates and changes to FHA HECM loan policy, especially in the areas that affect non-borrowing spouses. If an FHA borrower applies for a Home Equity Conversion Mortgage and has a spouse that is not a fellow FHA borrower, can that spouse remain in the home after the FHA borrower dies? There may be good news for these non-borrowing spouses depending on circumstances and the lender. According to an FHA Mortgagee Letter, HUDNo.15-0753, “Under FHAs revised policy, lenders will be allowed to proceed with submitting claims on HECMs with Eligible Surviving Non-Borrowing Spouses and Case Numbers assigned before August 4, 2014 in accordance with the terms of the mortgagee letter by: –Electing to | more...