Articles Tagged With: HUD

March 14, 2011

FHA Rules for Automatic Inspections

The FHA has standards for appraisers that mandate an “automatic inspection” if certain conditions are detected. In 2005, the FHA modified some of those policies for existing construction buildings to eliminate an “automatic inspection” requirement. “In a continuing effort to reform and standardize its appraisal requirements, FHA has shifted from its historical emphasis on the repair of minor property deficiencies and now only requires repairs for those property conditions that rise above the level of cosmetic defects, minor defects or normal wear and tear.” The FHA adds, “FHA Roster Appraisers are reminded to report all readily observable property deficiencies…” according to FHA Mortgagee Letter 05-ML-48. Termite inspections, for example, are one area that changed under the new rules for existing construction housing being reviewed for an FHA mortgage loan. The | more...

March 12, 2011

FHA Reverse Mortgages: What Makes Them Come Due?

By Joe Wallace

One of the most attractive features of an FHA reverse mortgage for some applicants is that the loan does not come due until the applicant dies or sells the property. There are no monthly mortgage payments on an FHA Reverse Mortgage, also known as an FHA Home Equity Conversion Mortgage. Instead, the loan is paid off as described above (when the owner dies or sells the home). The borrower–who must be age 62 or older–gets the proceeds from the loan to use as needed. But there are issues which could make a HECM loan due immediately–what could force the lender to call in the loan immediately? There are several scenarios. The terms of an FHA reverse mortgage require timely payment of property taxes, hazard insurance, and any other financial obligations | more...

March 7, 2011

FHA Appraisal Fee Facts

By Joe Wallace

The FHA loan process includes an appraisal of the property to be purchased. This appraisal is performed by an FHA approved professional and the loan cannot move forward without it. The appraisal is a critical part of the process for two reasons–it establishes that the property meets the FHA minimum property requirements and establishes a fair market value for the property. Once the fair market value is known, the FHA loan amount can be approved, provided the borrower has meet all FHA requirements for creditworthiness and other factors. FHA Appraisal Fact–The Borrower Pays For The Appraisal The FHA allows the lender to charge the borrower for the FHA appraisal. This is a standard part of the loan process. There are many reasons why this cost must be handled by the | more...

March 4, 2011

More on FHA 203(h) Loans

By Bruce Reichstein

In a recent blog post, we discussed the basics of the FHA 203(h) loan, which insures mortgages taken out by people who have lost property in a major disaster. The FHA 203(h) program allows FHA-qualified lenders to offer FHA loans to specifically to those who have either lost their homes in the disaster or have had extensive damage to the home. The FHA rules for 203(h) loans say, “Individuals are eligible for this program if their homes are located in an area that was designated by the President as a disaster area…(these) mortgages may be used to finance the purchase or reconstruction of a one-family home that will be the principal residence of the homeowner.” There are important things to remember about 203(h) loans. Some financial institutions instruct their lenders | more...

March 2, 2011

What Is an FHA 203(h) Mortgage?

By Joe Wallace

The FHA has a wide variety of home loan products, but it’s easy to assume that an FHA loan is just for people searching for their first home, trying to refinance, or looking to purchase another home after having sold their previous one. Did you know the FHA also provides home loans for victims of major disasters? An FHA mortgage program called Section 203(h) allows qualified lenders to offer FHA loans to those who lost their property in a major disaster and are in the process of buying a new home or rebuilding the old one. To qualify for this loan, FHA borrowers must meet credit and eligibility requirements typical for any FHA loan program but there are additional qualifiers. According to the FHA, “Individuals are eligible for this program | more...

March 1, 2011

Changes to FHA Cash Out Refinancing Requirements

By Bruce Reichstein

Many changes to FHA refinancing programs were announced in FHA Mortgagee Letter 2011-11, including alterations to the rules for FHA cash-out refinancing loans. FHA mortgagee letters, which are intended for approved borrowers and FHA lenders alike, routinely update rules and regulations when changes are made–these announcements are an important resource for FHA borrowers and it’s definitely a good idea to keep up with them if you’re interested in getting a new FHA loan or refinancing an existing one. In previous blog posts, we’ve discussed the changes FHA Mortgagee Letter 2011-11 announced as “effective immediately”, including an important clarification on the requirement for borrowers to be current on their FHA mortgages when applying for any kind of FHA refinancing. According to the FHA, “Mortgagors must be current on the mortgage being

February 28, 2011

FHA Appraisals Vs. Home Inspections

By Bruce Reichstein

There are two costs an FHA borrower pay when purchasing a home with an FHA insured mortgage. One is required, the other is optional, but FHA loan applicants should count on paying for both to insure the best possible experience with the new home. An FHA appraisal is the mandatory expense buyers must pay when trying to buy a house with an FHA mortgage. The FHA must determine the property meets FHA standards for safety, longevity, and other factors before it will insure the loan. Appraisals are designed to assign the fair market value of the home. While the appraisal is meant to insure the home is safe and livable, it is not considered an inspection and does not pretend to be a comprehensive look at all features of the | more...

February 28, 2011

Where Do I Go for an FHA Insured Home Loan?

By Joe Wallace

First time home buyers often don't know where to start when it comes time to find that first home. Locating properties for sale isn't challenging--there are plenty of for sale signs in or near practically every neighborhood and even more to browse in the local papers and online real estate listings. But finding the home is only part of the challenge. Where does a buyer find a suitable lender? A buyer who wants an FHA home loan might not know where to start looking to find a lender. Conventional borrowers have it easier--any suitable bank with the right terms will do.

February 25, 2011

FHA Streamline Refinancing Rules

By Joe Wallace

There have been several changes to the rules affecting FHA refinancing loans. Subordinate liens, the waiting period borrowers must go through before applying for an FHA refinancing loan, and other important areas have all been affected by new rules designed to protect the FHA loan program and tighten control in certain areas of the refinancing process. For example, borrowers are now required to be current on their mortgage the month prior to and for the month of the closing date.

February 25, 2011

Changes to FHA Refinancing Rules

By Joe Wallace

In our last blog post we discussed some changes to FHA refinancing loan rules. Effective immediately, the FHA requires all borrowers seeking streamline refinancing to make at least six mortgage payments on the property. There must also be a minimum of