Articles Tagged With: HUD

January 17, 2013

Paying The Up Front Costs Of Your FHA Loan

The FHA loan program is designed to help borrowers get into an affordable home. However, those new to the FHA loan program might not realize there are up front expenses which must be budgeted for; unlike the VA loan program administered by the Department of Veterans Affairs, the FHA loan program does not feature a “no down payment” option. FHA home loans have a required down payment the FHA regulations describe as a “minimum investment”. FHA loan rules as found in HUD 4155.1 describe the up-front costs of an FHA loan (including the down payment) as follows: “Under most FHA programs, the borrower is required to make a minimum downpayment into the transaction of at least 3.5% of the lesser of the appraised value of the property or the sales | more...

January 17, 2013

Virginia Beach-based Realty Company Settles Discrimination Case with FHA

By Joe Wallace

The FHA and HUD have issued a press release announcing the settlement of a housing discrimination case involving a company in Virginia Beach, VA. According to HUDNo.13-006, “Virginia Realty Company of Tidewater, Inc., a property management company based in Virginia Beach, VA, will pay $82,500 to settle allegations that it refused to allow a Hispanic woman to apply for an apartment because she did not speak fluent English. Virginia Realty had a policy of not renting to persons with limited English proficiency. The Fair Housing Act prohibits discrimination in the rental of housing on the basis of national origin.” The press release adds a quote by John Trasviña, HUD Assistant Secretary for Fair Housing and Equal Opportunity, who states, “Denying housing because a person does not speak English well violates | more...

January 14, 2013

FHA Loan Questions on Legal and Tax Issues Related to FHA loans

By Joe Wallace

There have been several questions lately about legal issues. Here’s one–a reader asks: “I live in a Michigan condominium that will have a special vote of our co-owners on 1/24/12 to determine if our association will make application under the HUD Review and Approval process (HRAP) to obtain FHA certification for our Association.” “In advance of this vote, our Board of Directors issued an opinion letter to our co-owners urging them to vote NO citing outdated 2008 FHA guidelines as the basis for their opinion, even though they are aware of the HRAP requirements that went into effect in 2010. If this proposal is defeated in our election, has by Board of Directors exposed my association to a potential discrimination suit because they intentionally mislead our co-owners in their opinion | 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 7, 2013

Adding Repair Costs To An FHA Home Loan

By Joe Wallace

When you want to purchase a home with an FHA guaranteed home loan, the property you want to buy must be appraised to determine its eligibility for the loan. A home that does not meet FHA minimum property requirements may not necessarily be ruled out for an FHA loan–an appraiser may note certain corrections that should be made to bring the home up to standard. In such cases, the loan may be approved contingent on those corrections being made. But can the expense of those corrections, when not paid by the seller, be included in the FHA loan amount? FHA loan rules provide for this, stating under what circumstances repair or improvement costs can indeed be added to the loan. According to HUD 4155.1 Chapter Two, “Repairs and improvements may | more...

January 3, 2013

Canceling An FHA Case Number: A Reader Question (Part Two)

By Joe Wallace

In our previous blog post, we addressed a question from a reader who asked, “Is it possible for the previous lender to cancel the FHA Case Number?” FHA case numbers may be canceled–there are rules that govern how this procedure is to be handled by the lender. The case number must be canceled in writing according to the procedure spelled out on the FHA/HUD official site. “The lender must notify the appropriate FHA Homeownership Center in writing to close outstanding files and cancel the FHA case number if the origination and closing of a loan will not be completed or if FHA mortgage insurance endorsement will not be sought.” The rules also remind lenders, “Please note that you cannot request a case number cancellation for an endorsed (insured) loan or | more...

January 1, 2013

Happy New Year!

By Joe Wallace

2013 is here! We look forward to helping you learn more about your FHA loan options, refinancing and related topics in the new year. Thank you very much for reading, for submitting your questions, and your replies. We wish you a safe and prosperous new year. Banks, stock markets, the U.S. post office and many other services are closed for the holiday…as are we. We’ll be back tomorrow for more answers to your questions and discussion of the issues. Happy New Year!

December 27, 2012

FHA Loan Applications: Verification of Employment

By Joe Wallace

From time to time we get questions about FHA loans including variations on the commonly asked, “How long do I have to spend on the job to get an FHA loan?” The short answer is that FHA loan rules require the lender to verify at least two years of employment, though not necessarily two years with the SAME employer. According to HUD 4155.1 Chapter One Section B, “The lender must obtain a Verification of Employment (VOE), and the borrower’s most recent pay stub” as part of this verification. But there are alternatives to this; FHA loan rules say “As an alternative to obtaining a written VOE, the lender may obtain the borrower’ s: • original pay stub(s) covering the most recent 30-day period, and • original IRS W-2 forms from | more...

December 24, 2012

FHA Revises Flood Zone Determination Policy

By Joe Wallace

The FHA and HUD have issued revised and updated guidance for borrowers and lenders regarding its flood zone determination policy. On December 11, 2012, the FHA official site was updated to include Mortgagee Letter 2012-28, which is intended to overrule a previous Mortgagee Letter issued in 2010 on the subject. At one time, those applying for FHA loans were not affected by a mandatory flood zone determination policy. In the past lenders were “strongly encouraged” to get a flood zone determination for home purchased with an FHA insured mortgage. That policy was revised, and is now updated and re-stated in FHA Mortgagee Letter 2012-28. According to the new mortgagee letter, “FHA requires all mortgagees obtain a flood zone determination on all properties. The documentation provided to evidence the flood zone | 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...