Articles Tagged With: HUD

June 1, 2011

FHA Loans and Escrow Accounts

The Real Estate Settlement Procedures Act provides powerful consumer protections when it comes to home loans. It establishes limits, requires lenders to be transparent when it comes to fees and expenses, and requires the borrower to be fully informed as to the costs of a home loan. FHA borrowers and conventional loan applicants alike are protected under RESPA. There are many protections, rules and requirements under RESPA, but one particular part of the act applies to escrow accounts for real estate loans. According to the FHA official site, “Section 10 of the Real Estate Settlement Procedures Act (RESPA) limits the amount of money a lender may require the borrower to hold in an escrow account for payment of taxes, insurance, etc. RESPA also requires the lender to provide initial and | more...

June 1, 2011

FHA Announces Green Refinancing Program for Multi-Family Buildings

By Joe Wallace

According to an FHA press release, “Approximately every 10-to-15 years, owners of existing multifamily affordable properties typically refinance their mortgages.” The release goes on to say that those who purchased older buildings may find it difficult to get approved for “additional financing to maintain or improve the physical condition of their properties, including making energy-efficient upgrades.” That’s where the FHA’s new program comes in. U.S. Housing and Urban Development Secretary Shaun Donovan has announced Green Refinance Plus, a joint program offered between the Federal Housing Administration (FHA) and Fannie Mae. Green Refinance Plus allow owners of “existing affordable rental housing properties to refinance into new mortgages that include funding for energy- and water-saving upgrades, along with other needed property renovations.” In the press release, HUD Secretary Shaun Donovan was quoted | more...

May 31, 2011

What Disaster Relief is Available For FHA Borrowers?

By Joe Wallace

Recent headlines all across America have told of floods, tornadoes and other natural disasters, all of which affect FHA borrowers, their homes and their mortgages. When an area is declared a major disaster area by the President of the United States, FHA borrowers should know there are programs that can help them in the wake of the disaster, provide help and forbearance on FHA loans, and even temporarily stop foreclosure proceedings. FHA officials urge borrowers to contact the FHA and the lender as soon as possible in the wake of a disaster as there are many steps that need to be taken in order to get help, advice and work on repairing a home damaged in the disaster area. But even before those calls are made, the FHA has begun | more...

May 30, 2011

FHA Loans: Minimum Property Requirements

By Joe Wallace

First-time applicants for an FHA mortgage learn soon learn about the FHA’s list of minimum property requirements, which any property bought with an FHA insured loan must live up to in order to get loan approval. The FHA has three guiding principles that inform its list of minimum property requirements, defined by what some appraisers call “the three S’s” which include safety, soundness and security. An FHA appraiser will come to inspect the property a borrower wants to buy, looking at the home to make sure it meets the FHA standards in each of these three areas. When it comes to safety, the FHA tells its appraisers, “Deficiencies or a lack of functioning components of plumbing, electrical or heating and cooling systems may create hazards that could be considered health | more...

May 27, 2011

Can I Assume an FHA Loan?

By Joe Wallace

There was a recent question in the comments section of this blog about FHA loan assumptions, so we thought it would be a good time to review the basics. Assumption of an FHA loan is a process where, according to the FHA official site, “the responsibility of the mortgage is acquired by another person through either Simple or Creditworthiness process.” This means that a potential borrower could take over the FHA mortgage of another borrower, but in some cases the process varies depending on when the FHA insured loan was originated. The “Simple” assumption process is only for FHA loans originated before December 1, 1986. Loans after that date may also be assumed, but the FHA requires a “creditworthiness assumption process”. Simple assumptions allow the borrower and lender to agree | more...

May 26, 2011

FHA Loans And Your Credit–What Is The Lender Looking For?

By Joe Wallace

In our last blog post, we discussed FHA loans and credit history. Many people are afraid to apply for a home loan because of past credit mistakes, but it’s easy to assume the worst about credit reporting, your history with credit, and what an FHA approved lender is looking for when reviewing an FHA loan application. In some cases, those assumptions also apply to a lack of credit history. An FHA lender must investigate the applicant’s credit reports. A few late credit card payments or other minor issues in the past aren’t enough to condemn the borrower or have an application rejected. The FHA rules don’t have a chart for counting credit issues and a cut-off number for how many late payments are too many. Instead, the FHA rules state, | more...

May 26, 2011

FHA Loans and Your Credit History

By Joe Wallace

A home loan is a major investment. Many borrowers are nervous about the credit qualifying portion of an FHA home loan application because they’ve made mistakes in the past with credit, have collection judgements in their record or have experienced bankruptcy. Those who have been through foreclosure sometimes assume they can never get their credit rating repaired enough to qualify for a home loan. But in many cases such fears are not warranted–at least where FHA loans are concerned. Conventional loans are more difficult to get in the wake of housing market woes, a bad economy and other factors, but borrowers trying for an FHA mortgage soon learn there are more options available than one might assume. According to the FHA rules, getting access to those options means having a | more...

May 20, 2011

FHA Loans and Non-Taxabl?e Income

By Joe Wallace

FHA applicants come from a wide range of backgrounds, and no two house hunters have exactly the same circumstances. Some borrowers bring a large down payment to the transaction, while others may need down payment assistance (as permitted by FHA guidelines) and help finding just the right type of FHA mortgage. When it comes to verifiable income, it’s the same–borrowers come to the FHA loan application process with a diverse range of income sources. A common question about FHA loans and effective income sources has to do with the nature of that income. Can a potential FHA borrower list money from public assistance, foster care, disability payments or other types of non-taxable income? Will an FHA-approved lender be able to use this income in calculating the borrower’s debt-to-income ratio? As | more...

May 18, 2011

Basic Facts About Qualifying for FHA Loans

By Joe Wallace

First-time home buyers looking to a home to purchase with an FHA guaranteed loan have many questions about the program and how it works. One of the first questions is, “Am I eligible for an FHA home loan?” One reason for this question is because FHA loans are sometimes misunderstood, especially when it comes to income requirements. Contrary to what some mistakenly believe, there are no income maximums for FHA loans. Some programs associated with down payment assistance or secondary financing may impose income ranges, but for a basic FHA home loan application, you cannot make “too much money” to qualify. The FHA does require borrowers have enough income to qualify for mortgage payments, and income is carefully scrutinized along with a borrower’s amount of existing debt. A borrower who | more...

May 17, 2011

FHA Loans and Citizenship Status

By Joe Wallace

FHA loans are designed to help people achieve the American dream of home ownership in an affordable way. But does that help with part of the American dream extend to those who aren’t citizens of the United States? According to the FHA official site, “Citizenship of the United States is not required for eligibility. When a mortgage loan applicant indicates on the loan application that he or she holds something other than U.S. citizenship, the lender must determine residency status from the documentation provided by the borrower.” FHA rules allow lawful resident aliens to apply for FHA home loans. There are two types–permanent, and non-permanent resident aliens. Regardless of which status an applicant falls in, the FHA does have procedures to document and verify status so the loan application may | more...