Articles Tagged With: HUD

October 31, 2012

FHA Energy Efficient Mortgages: Is Escrow Required?

When learning abo0ut FHA home loans, escrow is one issue some borrowers have questions about. The FHA frequently asked questions pages include the following about escrow, which is governed by something called the Real Estate Settlement Procedures Act or RESPA: “Does RESPA require borrowers to maintain an escrow account? NO. It is the lender’s decision whether the borrower must maintain an escrow account for the purpose of paying taxes and other items. The HUD regulations only limit the maximum amount that a lender can require a borrower to maintain in an account.” That Q&A from the FHA official site seems to indicate that the FHA does not require escrow; indeed, it is the lender’s choice to require escrow or not. But are there situations where an escrow account may actually | more...

October 25, 2012

FHA Loan Reader Question: What Does “Endorsed” Mean?

By Joe Wallace

A reader asks, “Can you please explain what “endorsed” means? I started my FHA streamline refi process March 11, 2009 through Countrywide. In the meantime BoA purchased Countrywide and the refi wasn’t finalized until June 29, 2009. Its not my fault the process took so long, and I sincerely hope I am not losing out on a refi or decrease PMI because of their delays!” This reader question most likely refers to FHA mortgagee letter HUDNo.12-045, which includes the following information about FHA Streamline Refinancing: “…Acting Federal Housing (FHA) Commissioner Carol Galante announced significant price cuts to FHA

October 16, 2012

Exceptions to the FHA Mortgage Insurance Payment Eligibility Date Rule: A Reader Question

By Joe Wallace

On March 6, 2012, the FHA and HUD issued Mortgagee Letter 2012-4, which included the following description of a decrease to the annual Mortgage Insurance Premium for “certain Streamline Refinance transactions”: “For all SF Forward Streamline Refinance transactions that are refinancing FHA loans endorsed on or before May 31, 2009, the Annual MIP will be 55 bps, regardless of the base loan amount. The endorsement date is on the Case Query screen in FHA Connection. This change is effective for case numbers assigned on or after June 11, 2012.” Additionally, the same document describes further changes to the up front mortgage insurance payments for these same loans: “For all SF Forward Streamline Refinance transactions that are refinancing existing FHA loans that were endorsed on or before May 31, 2009, the | more...

October 12, 2012

Can I Use A Power of Attorney To Apply For An FHA Home Loan?

By Joe Wallace

A not-so-commonly asked question, but a very important one about FHA loan rules, involves the use of a power of attorney to apply for or commit to an FHA mortgage loan. FHA loan rules state, “All borrowers applying for the mortgage and assuming responsibility for the debt must sign Fannie Mae Form 1003, Uniform Residential Loan Application (URLA), and all addenda.” “Either the initial loan application or the final, if one is used, must contain the signatures of all borrowers. The initial loan application may not be executed by power of attorney except for military personnel and incapacitated borrowers…” What does this mean? In short, there are only two types of FHA borrowers permitted to have a loan executed on their behalf by a power of attorney; the FHA official | more...

October 9, 2012

FHA Loans and Credit Score Requirements

By Joe Wallace

Recently we posted a reader question about FICO scores and FHA loan approval. The reader wanted to know why a credit score range between 540 and 618 didn’t qualify for an FHA mortgage. The reader question included the following: “My scores are 618 – 595 – 540…why couldn’t I qualify for this loan?” There are two factors at work when viewing FICO scores. The lender is required to observe FHA loan minimums–which this reader was technically able to meet. But the lender is also required to observe the FICO minimums established by the financial institution. If the FICO score doesn’t meet the bank’s minimum, it’s not eligible for FHA loan approval. How does the lender interpret the three credit scores to determine eligibility if a borrower is right on the | more...

October 8, 2012

HUD Reaches Settlement in Pennsylvania Discrimination Case

By Joe Wallace

On the FHA/HUD official site you’ll find a press release announcing a settlement in a discrimination case against a Pennsylvania company that allegedly discriminated against families because of their national origin. According to HUDNo.12-160, “The U.S. Department of Housing and Urban Development (HUD) announced today that it has reached a Conciliation Agreement with the Lancaster, PA-based Ecklin Group that will end an alleged policy of refusing to rent to Burmese refugee families.” The press release adds, “The agreement is the result of a complaint HUD initiated against the Group after company staff allegedly failed to renew the leases of three Burmese families because of their national origin, and made statements to various people that the group would no longer accept rental referrals for refugees that were referred by Lutheran Refugee | more...

October 4, 2012

The FHA Anti-Flipping Waiver: Due To Expire Soon?

By Joe Wallace

In 2001, the FHA issued a press release about a waiver of FHA anti-flipping regulations. The press release, HUDNo11-292 issued on December 28, 2011 stated; “In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, Acting Federal Housing Administration Commissioner Carol J. Galante today extended a temporary waiver of FHA

October 2, 2012

Is a Borrower Ever Automatically Ineligible for an FHA Home Loan?

By Joe Wallace

FHA home loans are designed to help eligible borrowers get into affordable mortgages. The general credit qualifying criteria and loan terms can be far more lenient than some conventional mortgages, and the FHA loan program has helped many who could not qualify for conventional loans because of large down payment requirements or other terms. But is there a time when a potential FHA loan applicant is automatically ineligible for an FHA mortgage? According to the FHA, the answer is yes. For the purposes of this blog post, we aren’t talking about those who have experienced a foreclosure or who have filed bankruptcy; after all, there is only a mandatory waiting period–the seasoning period–that must be waited out until such borrowers are eligible to apply again. They haven’t been forbidden from | more...

October 2, 2012

FHA Loans: Credit References

By Joe Wallace

It would be easy to assume that a borrower with little credit history, or non-traditional credit history, is not eligible for an FHA guaranteed mortgage. But this isn’t necessarily true–the FHA has a set of requirements for those with little credit history or non-traditional credit. In typical FHA loan cases, the borrower would submit credit card information, plus details on any student loans, car payments, rent, or other financial obligations. Borrowers who have alternative credit references can still apply and be considered for an FHA mortgage, thanks to a set of requirements for credit references that might be considered non-traditional. Borrowers should not give up on pursuing an FHA home loan just because they don’t have typical credit–as you’ll read below, there is much more that can be used on | more...

October 1, 2012

FHA Loan Restructuring: A Reader Question

By Joe Wallace

A reader asks, “Is there any program (modification), that can lower my payment, restructure a unfair loan, which I can qualify for considering I just got discharged from Chapter 7 so I can afford my other bills? I have been denied for modifications, through my lender, and denied on two time consuming demands from lenders before the bankruptcy. My mortgage takes most of my income.” FHA loan modifications must be done through the lender–no private third party is authorized to restructure another financial institution’s loan without its participation. However, there are home loan modification programs sponsored by the government, such as HAMP (the Home Affordable Modification Program) that work with a participating lender. HAMP is aimed only at certain types of home loans, though VA and FHA loan programs may | more...