Articles Tagged With: Mortgage Underwriting

December 3, 2012

FHA Loan Rules For Multiple Residences: A Reader Question

A reader asks, “Any person individually or jointly owning a home covered by an FHA- insured mortgage in which ownership is maintained may not purchase another principal residence with FHA insurance, except in certain situations as described in HUD 4155.1 4.B.2.d.” “What are the exemptions? FHA loan rules, as published in HUD 4155.1 Chapter Four, Section B, state: “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower. FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be insured will be the only one owned using FHA mortgage insurance.” There are | more...

November 30, 2012

FHA Foreclosure Protection, Home Loans and Refinancing For West Virginia Storm Victims

By Joe Wallace

The FHA and HUD have issued yet another Hurricane Sandy press release, this time announcing assistance for home owners in West Virginia affected by Hurricane Sandy. According to HUDNo.12-181, U.S. Housing and Urban Development Secretary Shaun Donovan has announced that FHA/HUD will “speed federal disaster assistance to the State of West Virginia in addition to resources being provided by FEMA and other federal partners. HUD will provide support to homeowners and low-income renters forced from their homes due to Hurricane Sandy.” On Wednesday November 28, 2012, President Obama issued a disaster declaration for the following West Virginia counties: Barbour, Boone, Braxton, Clay, Fayette, Kanawha, Lewis, Nicholas, Pendleton, Pocahontas, Preston, Raleigh, Randolph, Taylor, Tucker, Upshur, Webster, and Wyoming. This federal disaster zone declaration allows HUD to offer foreclosure relief and other | more...

November 23, 2012

FHA Loans and Credit Scores Below 620: A Reader Question

By Joe Wallace

A reader asks, “My husband and I have a credit score of 536. We have 41,000 to put down on a house. Can I get an FHA loan. I applied with a bank but could not.” This reader question doesn’t specifically ask, but it does imply that the reader might be under one of the most common misconceptions about the FHA loan program–that the FHA itself is responsible for making loans, lending money or otherwise distributing funds. The FHA does not loan money or disburse funds. Instead, it guarantees the home loans which are issued by a participating lender. The lender is responsible for processing, approving or denying the FHA loan applications it receives. FHA loan applicants should know that while FHA minimum credit scores at listed at 500 and | more...

November 19, 2012

Minimum Property Requirements: FHA Loan Reader Questions

By Joe Wallace

A reader asks, “I have an appraisal prepared by FHA approved appraiser. This is a short sale and appraiser has made comment that carpet in master bedroom has been removed and has bare concrete floors.” “Yet does not pose a health hazard. She has done the appraisal “As Is” but stated floor covering is required. Question is does FHA accept the floor to be painted with a sealer. Borrower does not want to put carpet in until the property is in their name. Seller will not do anything as it is a short sale. Thanks.” FHA mortgagee letters have in the past indicated that “exposed sub-flooring” or missing carpet can be grounds for issuing a correction. In this question the reader states that the missing carpet does not pose a | more...

November 15, 2012

FHA Refinance Loans: A Reader Question

By Joe Wallace

A reader asks, “I am trying to refinance my house but have had no luck. I have been employed with the same company for several years.” “My credit score is low, During the time period from 2007-2009 I was laid off twice. The only debt we have is our mortgage and what is associated with the house. Can I qualify through FHA for a refinance?” The reader’s question includes a mention of low credit scores. Low credit scores can definitely affect a borrower’s ability to borrow, depending on circumstances, the actual FICO score number and other factors. While some refinance loans are intended to assist a borrower and help reduce monthly payments, interest rates, or both, the credit score issue can be a factor. But it’s not safe to assume | more...

November 9, 2012

FHA 203(k) and Streamlined 203(k) Loans

By Joe Wallace

The FHA offers a home loan program known as the 203(k), which the FHA/HUD official site describes as a home loan guaranty from the FHA for the purpose of helping “homebuyers and homeowners to finance both the purchase (or refinancing) of a house and the cost of its rehabilitation through a single mortgage or to finance the rehabilitation of their existing home.” The 203(k) program “fills a unique and important need for homebuyers. When buying a house that needs repair or modernization, homebuyers usually have to follow a complicated and costly process. The interim acquisition and improvement loans often have relatively high interest rates, short repayment terms and a balloon payment.” The FHA 203(k) option offers an alternative to this, featuring a single mortgage at a fixed or adjustable rate, | more...

November 7, 2012

FHA Loan Rules For Flood and Hazard Insurance

By Joe Wallace

In the wake of Hurricane Sandy, it seems like a good time to review a recent FHA Mortgagee Letter which addresses issues regarding hazard and flood insurance payments. While not all FHA borrowers may be affected by either storm damage or the rules in this FHA mortgagee letter, those that are affected should know the latest FHA guidance. FHA mortgagee letter 2012-19, titled “Hazard and Flood Insurance Requirement Reminder” reminds lenders about the Department of Housing and Urban Development’s “existing servicing procedures as they pertain to releasing hazard insurance proceeds for damaged properties securing Federal Housing Administration (FHA) insured mortgage loans.” According to the letter, the FHA “standard mortgage document” requires that the mortgagee–the lender–is named as a “Loss Payee” on the hazard insurance policy issued in connection with an | more...

November 6, 2012

FHA Short Refinance Program Enhancements

By Joe Wallace

Earlier in 2012, the FHA announced some changes to its FHA Short Refinance program, which was originally announced in 2010 in a Mortgagee Letter titled ” FHA Refinance of Borrowers in Negative Equity Positions”. This program, also known as the FHA Short Refinance, is designed to allow “responsible homeowners with negative equity an opportunity to refinance their homes. These enhancements were designed to maintain homeownership by providing borrowers with conventional loans, who owe more on their mortgage than the value of their home, opportunities to refinance into an affordable FHA loan.” “This opportunity allows only non-FHA insured loans to qualify for an FHA refinance loan provided that the lender or investor writes off the unpaid principal balance of the original first lien mortgage by at least 10 percent.” The changes | more...

November 5, 2012

FHA Loans: What is the 203(b) Home Loan Program?

By Joe Wallace

If you go to the FHA official site to do some research on your FHA loan options, it can be a bit challenging to navigate the programs–there are a lot of different types of FHA loans to choose from including the 203(b), the 203(k), and many others. Some borrowers want to cut through all the names, acronyms, and jargon to learn about the FHA’s basic home loan program. If you’re one of those people, know that the FHA 203(b) home loan program is the one you’re looking for. In the words of the Federal Housing Administration, the purpose of the FHA 203(b) loan is to “provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a | more...

November 1, 2012

What is the FHA Minimum Credit Score: A Reader Question About FHA Loans

By Joe Wallace

A reader asks, “What is the minimum credit rating score needed to be considered for an FHA loan?” This question comes up very frequently, and the answer is always a two-parter. For starters, borrowers should understand the FHA’s minimum FICO credit score requirements. These requirements are described on the FHA official site as follows: For FHA loans with case numbers “assigned on or after 10/04/10”, FHA loan rules state: When the decision credit score is: