Articles Tagged With: HUD

July 29, 2011

FHA Loans For Homes Near Airports and Runways

The location of the home an FHA loan applicant wants to purchase affects many things connected to FHA loan approval. The FHA loan limit is a good example–these limits are set by county and vary depending on the housing market in a given area. Homes located in some counties may have requirements based on local building codes other areas don’t require. And some properties may get closer scrutiny if they are located in or near flood zones or other areas identified as prone to natural disasters. With all that in mind, some borrowers may worry about the eligibility of a particular home for an FHA loan based on its proximity to airports or military air fields. Is a property rendered ineligible for an FHA home loan because it is in | more...

July 28, 2011

FHA Loans, the Fair Housing Act, and Discrimination

By Joe Wallace

Elsewhere on this blog, we’ve mentioned the policies of the FHA, Department of Housing and Urban Development, and federal law designed to protect borrowers from discriminatory practices in real estate lending and related areas. FHA home loans are, by federal law and program requirements, intended to be available to all qualified applicants regardless of race, color, national origin, religion, sex, familial status or disability. But some people still don’t understand the full implications of these laws, which extend to rentals and homeowners associations, not just the lending process. A July 20, 2011 press release from HUD describes charges against a Wisconsin landlord accused of violating the Fair Housing Act by “allegedly establishing different terms for a single mother

July 21, 2011

FHA Loans And Appraisal Expiration Dates

By Joe Wallace

When a buyer finds a home to purchase using an FHA insured mortgage, the property must be appraised to establish the market value and make sure the home meets FHA standards before the loan can be approved. Once the home has been appraised and approved for sale, the borrower and lender can work out an agreed closing date. But FHA appraisals have an expiration date–they don’t remain valid indefinitely due to housing market changes and other variables. One common question about the appraisal process is whether the FHA allows an appraisal to be extended if it expires prior to the closing date. The short answer is that the appraisal may be extended for thirty days to allow the loan to close, “If a sales contract is signed or the borrower | more...

July 20, 2011

FHA Requirements For Condo Units

By Joe Wallace

In our last blog post we discussed FHA rules on condo units that affect their eligibility for FHA mortgages. The FHA does not approve condo loans for any property that features deed restrictions which penalize the borrower for selling or transferring ownership of the condo to someone else. FHA regulations state that any property purchased with an FHA mortgage must be freely transferable without penalty. But those aren’t the only requirements on FHA condo loans. FHA rules include provisions for proper documentation (in conjunction with applicable state law) of homeowner’s agreements, and statements of understanding between condo owners about shared responsibility for property management. FHA borrowers new to condominium ownership might not know that the responsibilities of condo ownership include shared duties and costs such as facility maintenance, code compliance, | more...

July 15, 2011

Verifiable Income Rules For FHA Borrowers Between Jobs

By Joe Wallace

FHA loan applications require the borrower to submit information on past and current employment including gross income, how long the job has lasted, and other details. This data is not accepted at face value by the lender; the FHA requires the loan officer to verify sources of income to make sure they are legitimate and acceptable.

July 14, 2011

FHA Loans, Gift Funds and Inducements to Purchase

By Joe Wallace

When a borrower applies for an FHA home loan, a down payment is required for all transactions. Unlike VA home loans, FHA mortgages do not have a zero-money-down option. Some buyers may struggle to come up with a down payment on the FHA mortgage, which is why the rules allow borrowers to accept funds from outside sources to help pay for up-front expenses like down payments and closing costs as permitted by FHA regulations. But the source of that income determines whether the money is considered a bona fide gift, or if it is considered an “inducement to purchase” which affects the amount of the FHA mortgage loan. Gift funds that come from anyone with “an interest in the sale of the property” can be considered inducements to purchase, and | more...

July 12, 2011

FHA Loan Rules For Co-Signers, Co-Borrowers

By Joe Wallace

When a borrower applies for an FHA insured mortgage, he or she has the option of bringing a co-signer or co-borrower to the deal. It may be easy to assume the two terms are interchangeable, but they aren’t. Co-signers and co-borrowers have different rights and responsibilities under FHA regulations and it’s important to know which is which–especially if you’re the co-signer or co-borrower. The major difference between the two is that a co-borrower “takes title to the property”, meaning that there is shared ownership between co-borrowers. Co-signers sign the legal paperwork and are obligated to pay on the mortgage. Regardless of what financial arrangements have been made privately between the co-borrowers, on paper co-borrowers share responsibility for the mortgage payment. Co-borrowers must qualify for the VA loan together. Compare those | more...

July 12, 2011

Fidelity National Financial to Pay 4.5 Million in RESPA Kickback Settlement

By Joe Wallace

FHA borrowers come to the bargaining table with a set of consumer protections on their side in the form of the Real Estate Settlement Procedures Act, or RESPA for short. One of those protections is a policy that lenders may not get any financial compensation for referring business to third parties such as home warranties, insurance, etc. This rule prevents a conflict of interest in the real estate industry; RESPA laws are designed to keep buyers from being steered towards goods and services based on hidden relationships between lenders and third parties. HUD recently issued a press release announcing a settlement involving Fidelity National Financial, which was found to have engaged in illegal kickbacks and referral payments. The press release says Fidelity National Financial, “engaged in a widespread and years-long | more...

July 7, 2011

FHA Loans: What’s The Minimum Credit Score?

By Joe Wallace

Applying for a home loan can be daunting; some people feel intimidated by the home loan process because of past credit mistakes they’ve made and assume they aren’t eligible for a home loan because of those mistakes. But is it safe to assume that a few problems in the past will keep you from becoming a home owner? Not necessarily. According to FHA rules, what makes a borrower eligible for an FHA mortgage is a combination of credit history, steady employment and your debt-to-income ratio, and the record of reliable payments in the last 12 to 24 months. The more reliable you are as a bill payer, the better chance you have of being approved for an FHA home loan. What do the FHA loan rules say about credit scores | more...

July 7, 2011

FHA Loans: What The Lender Looks For In Your Credit Report

By Joe Wallace

When a borrower fills out an FHA loan application, there is a requirement to submit a variety of information including proof of income, residency information, and financial details including all currently open lines of credit. The lender will verify all this information, including credit history. The lender must order credit reports from the three major agencies–Equifax, TransUnion, and Experian. These reports cannot be furnished by the borrower, they must come directly from the credit reporting agencies and must contain no erasures or alterations to the physical report itself. Corrections or deletions of any erroneous information must be made by the borrower through the credit reporting company’s official channels. When the lender gets your credit reports, he or she is looking for a standard set of information as spelled out in | more...