Articles Tagged With: Mortgage Underwriting

May 16, 2013

FHA Reader Question: FHA Loans For Second-Time Home Buyers

There are many myths and misconceptions about FHA home loans. One of them is brought up in our latest reader question in the comments section. A reader asks, “Do we have to be first time home buyers to qualify for an FHA loan?” The simple fact of the matter is, anyone who meets the financial qualifications can apply for an FHA home loan. You do NOT have to be a first time home buyer to qualify, and the financial qualifications include having a steady, dependable income that is likely to continue. Your debt-to-income ratio plays a part in loan approval, so potential borrowers who worry their bills are too high to qualify should contact the FHA or the loan officer about the rules covering debt/income ratios. Borrowers who are second-time | more...

May 16, 2013

FHA Loan Questions: Identity Of Interest Transactions

By Joe Wallace

One common question about FHA home loans involves the FHA rules about who can sell to whom. When it comes to a home owner selling property to someone they do not know, the rules are simple. FHA guidelines don’t allow a home owner with an “identity of interest” in the outcome of the sale to sell to an FHA borrower AND be a co-signer or co-borrower on the mortgage. What does that mean? According to HUD 4155.1 Chapter Four Section A, “A party who has a financial interest in the mortgage loan transaction, such as the seller, builder, or real estate agent, may not be a coborrower or a cosigner.” You can’t be both the buyer AND the seller. But what about in cases where the seller is a relative? | more...

May 15, 2013

FHA Loan Questions: Well Water

By Joe Wallace

A reader asks, “Purchasing an existing home in rural county in Oklahoma. What are the FHA guidelines on water system? No rural water at property. It’s well water. Would FHA loan on that water supply?” It’s important to point out that the FHA does not loan money–the FHA guarantees the loan issued by a private lender. That out of the way, let’s examine what FHA loan rules say about wells in 4150.2, Property Analysis. In the section titled, “Individual Water Supply and Sewage Disposal Systems” we find the following: “If water and sewer systems are not connected to public systems, the water well and/or septic system must meet the requirements of the local health authority with jurisdiction.” That means the FHA won’t guaranty a loan for a property that has | more...

May 13, 2013

FHA Energy Efficient Mortgage Rules For Streamline Refinance Loans

By Joe Wallace

The FHA Energy-Efficient Mortgage (EEM) option is available for borrowers who want to apply for additional money to be used for energy-efficient upgrades on the home being purchased or refinanced with an FHA mortgage. An FHA EEM is subject to certain rules and requirements, especially when paired with a Streamline Refinance. For example, one of the requirements of a Streamline Loan is that the borrower must get a benefit from the refinance–usually in the form of lower interest or monthly payments. But with some FHA EEMs, the payments may actually go up. Is this permitted under the rules? HUD 4155.1 spells out when those higher payments may be allowed–the guidence is found in Chapter Six, Section D. Under “Streamline Refinance Transactions with EEM” where you’ll find the following: “For a | more...

May 10, 2013

Distressed FHA Mortgages Up For Auction In June

By Joe Wallace

A press release issued by the FHA and HUD announces an auction of delinquent FHA mortgage loans in June of 2013. According to HUDNo.13-066, the move is intended as a form of relief in distressed areas and as a part of, “a broader effort to address the housing market’s shadow inventory and to target relief to areas experiencing high foreclosure activity” according to the release. The press release also adds, “This summer, HUD will sell approximately 20,000 distressed loans through its expanded Distressed Asset Stabilization Program (DASP) to increase recoveries to FHA’s Mutual Mortgage Insurance (MMI) Fund from non-performing FHA-insured loans, while contributing to stabilization and recovery in some of the nation’s communities hit hardest by the housing crisis.” The auction will proceed in a manner similar to past note | more...

May 9, 2013

HUD Settlement Reached In Housing Discrimination Cases

By Joe Wallace

The FHA and HUD have issued a press release concerning two cases of alleged housing discrimination where settlements have been reached. According to HUDNo.13-067, two conciliation agreements have been reached between the Department of Housing and Urban Development and SunTrust Mortgage Inc. “settling allegations that the Richmond, VA-based lender denied mortgage loans to a couple in Port St. Lucie, FL, and another couple in Ashland, VA, because the women were on maternity leave.” As the press release states, Fair Housing Act laws make it “unlawful to discriminate in residential real estate-related transactions based on race, color, national origin, religion, sex, disability, or familial status.” Lenders cannot, under the Fair Housing Act, deny a loan application because a person is pregnant, or deny a loan because the borrower has taken maternity | more...

May 9, 2013

FHA Loan Reader Questions: HOA Issues

By Joe Wallace

A reader asks, “The town home next door is ruined by fire in July 2012 and not repairing. Trash in carport…I have one wall connecting with that house and my roof is damaged too. I contacted the HOA (I pay $ 100 each month and they should repair roof, clean up territory, etc) but they will DO NOT make any repairs or clean-ups. Even broken sidewalk by broken unit not repaired! I contacted the City and few Code Enforcement officers show up, now is almost year gone but no repairs…I call Code Enforcement again, but they told me, ‘case in progress’ and nothing more. How I can save my house from damage from that broken unit next door – and make Association do the work and repair the roof and | more...

May 7, 2013

FHA Loan Reader Questions: Mortgage Insurance Premiums

By Joe Wallace

A reader asks, “My home has more than 50% equity and I am thinking about refinancing with an FHA loan… will i still need mortgage insuranc3e for the life of the loan.. or can it be cancelled after verification of equity?” FHA loan rules for annual mortgage insurance premiums are changing. Some of the rules have already taken effect, and others go into effect on June 3 2013. FHA Mortgagee Letter 2013-04 says: “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.” Additionally, “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 | more...

May 6, 2013

FHA Loan Reader Questions: Do All Homes For Sale Require an Appraisal?

By Joe Wallace

A reader asks, “Do all homes need an inspection and an appraisal? My sister-in-law is the seller and is worried (about an) older kitchen; FHA may not give me a loan. The home is in good condition and the family already did an appraisal in order to get an asking price.” There are two separate procedures asked about in this reader question–an appraisal is not the same thing as a home inspection, but both are important parts of the home buying process. A home inspection is a voluntary service the borrower can and definitely SHOULD budget for when purchasing a home with any kind of mortgage whether it is an FHA, conventional, VA loan, etc. The home inspection is a more up-close look at the condition of the property and | more...

April 26, 2013

FHA Loan Reader Questions: Can My Spouse Apply Alone For An FHA Loan?

By Joe Wallace

A reader asks, “I am married and I have an extremely high debt to income ratio. On the other hand my husband has less credit but double my income and very low debt to income ratio. Is it possible that an he qualify using only his income and credit to qualify for an FHA loan?” There are several factors which may apply in a situation like this. Borrowers should know that when applying for FHA home loans, credit scores, employment history, verifiable income and other factors will figure into loan approval. That said, assuming all the above requirements are met, the basic question is whether a borrower can apply for an FHA loan independently of the spouse. This depends on community property laws which may apply in the state where | more...