Articles Tagged With: Mortgage Insurance

February 19, 2013

The New FHA MIP Rules

We’ve written more than one blog post recently on the changes to the FHA mortgage insurance policy. Because of the potential for confusion over these changes, we’re attempting to explain these changes one important detail at a time. When the FHA announced its changes and made them official, it issued a mortgagee letter which includes the following information: “For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute. For all mortgages regardless of their amortization terms, any mortgage involving an original principal obligation (excluding financed Up-Front MIP (UFMIP)) less than or equal to 90 percent LTV, the annual MIP will be assessed until the end of the mortgage term or for the first 11 | more...

February 12, 2013

New “Final Rule” On Housing Discrimination Standards

By Joe Wallace

The FHA and HUD have a new yardstick to measure housing discrimination and take appropriate action where needed, according to a recent press release issued by the Department of Housing and Urban Development. According to the press release HUDNo.13-022, HUD is “issuing a final rule to formalize the national standard for determining whether a housing practice violates the Fair Housing Act as the result of discriminatory effect.” “Through the issuance of this Rule,HUD is reaffirming its commitment to enforcing the Fair Housing Act in a consistent and uniform manner,” said HUD Secretary Shaun Donovan. “This will ensure the continued strength of one of the most important tools for exposing and ending housing discrimination.” As the press release states, HUD is “statutorily charged with the authority and responsibility for interpreting and | more...

February 11, 2013

FHA Loan PMI Changes: A Reader Question

By Joe Wallace

A reader asks. “I read somewhere that the PMI will no longer drop off after 78% of the LTV is reached and will remain on the loan until full payment. Is this true?” The FHA has indeed changed its rules concerning mortgage insurance premiums. We covered the FHA announcement in a recent post, but many borrowers or soon-to-be FHA loan applicants wonder if the new FHA loan rules for mortgage insurance apply to their loans. Let’s examine what the FHA has announced about mortgage insurance premiums. The changes are twofold–one is an increase in the MIP premiums, the other change has to do with mortgage insurance cancellation policy. In a press release titled, “FHA Takes Additional Steps To Bolster Capital Reserves” the agency announced; “FHA will increase its annual mortgage | more...

February 7, 2013

FHA Loan Reader Questions: FHA Loans After a Foreclosure

By Joe Wallace

A reader asks, “I had a bankruptcy discharged in 2009. My mortgage was part of this bankruptcy however the bank did not foreclose until 2012. I am employed and have an average credit score of 678. Would I qualify for a FHA loan on a new property?” This is a tricky question because it includes both a bankruptcy AND a foreclosure. In such cases it’s best to contact the FHA directly for advice. Does the borrower’s two situations–bankruptcy and foreclosure–have any special consideration? There are different possibilities depending on the type of bankruptcy (not mentioned in the reader question), but let’s examine the FHA rules for the borrower’s more recent foreclosure issue. Can a borrower apply for an FHA mortgage in 2013 if there was a foreclosure action in 2012? | more...

January 24, 2013

FHA Single-Family Home Loans: For Personal Use Only

By Joe Wallace

One topic we’ve covered recently in blog posts and in our answers to reader questions concerns the permitted uses for single-family FHA home loans. Read what the FHA official site says about FHA policy (in general) on multiple FHA home loans for a single borrower: “To prevent circumvention of the restrictions on FHA-insured mortgages to investors, FHA generally will not insure more than one mortgage for any borrower (transactions in which an existing FHA mortgage is paid off and another FHA mortgage is acquired are acceptable).” FHA home loans for single-family properties also have a rule stating the borrower must occupy the property as the primary residence once the sale is complete. That is another rule designed to reinforce the “no investors” policy on these types of loans. Some borrowers | 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 15, 2013

FHA Loans For Manufactured Homes: A Reader Question

By Joe Wallace

A reader asks, “My wife, 5 year old and I live in North Carolina with her parents b/c it simply costs too much to rent. Her parents purchased a manufactured home that is over 10 yrs old (1998) 3 years ago as well as the roughly 3/4 acre lot it sits on.” “The house itself does have a permanent foundation (Strapped or bolted to a PIP or masonry perimeter foundation, with no tow gear left in the crawl). They currently still owe significantly on the mortgage. I’ve been looking at the FHA sites out there for information but I haven’t learned an answer to my question. My question is, can my wife and I buy her parents house and land through a manufactured home loan when the house itself is | 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 9, 2013

FHA Loan Rules For Self-Employed Borrowers: A Reader Question

By Joe Wallace

A reader asks, “Are there specific rules for applicants who are self-employed or independent contractors and receive a 1099 instead of a W-2?” Yes. Self-employed borrowers and independent contractors must have their income verified the same as more traditionally employed borrowers. For self-employed FHA loan applicants this may include additional paperwork; tax statements, proft-and-loss sheets, even business plans or other related documentation depending on the lender’s requirements. Self-employed and contract workers have specific criteria that must be observed. What defines “self employed” as opposed to “contract”? You may be considered self-employed if you have a 25% or greater controlling interest in a business. The lender has to determine your level of ownership in a company. A contract employee may not be required to submit the same documentation as a self-employed | more...