October 4, 2012
In 2001, the FHA issued a press release about a waiver of FHA anti-flipping regulations. The press release, HUDNo11-292 issued on December 28, 2011 stated; “In an effort to continue stabilizing home values and improve conditions in communities experiencing high foreclosure activity, Acting Federal Housing Administration Commissioner Carol J. Galante today extended a temporary waiver of FHA
October 2, 2012
FHA home loans are designed to help eligible borrowers get into affordable mortgages. The general credit qualifying criteria and loan terms can be far more lenient than some conventional mortgages, and the FHA loan program has helped many who could not qualify for conventional loans because of large down payment requirements or other terms. But is there a time when a potential FHA loan applicant is automatically ineligible for an FHA mortgage? According to the FHA, the answer is yes. For the purposes of this blog post, we aren’t talking about those who have experienced a foreclosure or who have filed bankruptcy; after all, there is only a mandatory waiting period–the seasoning period–that must be waited out until such borrowers are eligible to apply again. They haven’t been forbidden from | more...
September 27, 2012
The FHA has issued a reminder to lenders to “quickly release hazard insurance payments” to affected borrowers trying to recover from Hurricane Isaac. According to an FHA press release, HUDNo.12-156, the FHA wants to “reinforce its existing policy requiring lenders to release insurance payouts to homeowners eager to rebuild their damaged homes following disaster.” The release states, “In the past, the U.S. Department of Housing and Urban Development (HUD) noticed some lenders would instead use these insurance funds to pay off the outstanding mortgage balance, leaving many homeowners without the resources they need to rebuild their homes.” Carol Galante, FHA
September 26, 2012
A recent reader question about FHA loan requirements for occupancy begs the question; what does the FHA consider a “principal residence” or “primary residence” and will the FHA approve of a second FHA mortgage for those who purchase single-family, owner-occupied property? According to the FHA loan rules, found in HUD 4155.1, in the section titled “FHA-Insured Mortgages on Principal Residences and Investment Properties” you’ll find the following: “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.” If you want to buy a home, this means the FHA expects you to use it AS a home. Additionally, “FHA will not insure a mortgage if it is determined that the transaction was designed to use | more...
September 26, 2012
A reader asks, “I purchased a home in 2006 with an FHA loan. At the time, I remember a stipulation that I was required to reside in the house, for three years (I believe), which I did.” “I have since moved and rented out the property, and just received a letter from my mortgage company that they had received word that my mailing address had changed, and that per the terms of my FHA loan, I was required to occupy the house until the mortgage was paid off, and that I may be facing tax penalties.” “They have asked me to sign a form verifying that I still occupy the house and will do so until the mortgage is paid in full. Are there any types of first time homeowners | more...
September 24, 2012
We’ve reported many new changes to the FHA condo approval process that allows a condominium project to be considered for an FHA loan for individual units. Condo projects must be FHA approved before a borrower can apply for an FHA guaranteed mortgage on a unit in that condo project; that means a project’s compliance with FHA loan rules is very important. For example, a condo project may not be approved for an FHA mortgage loan if there are restrictions on the borrower’s ability to freely sell the property. The FHA has gone back and forth on an issue related to “the right of first refusal” which limits a borrower’s ability to sell. Condo loan applicants have reported problems with the right of first refusal clause, getting turned down for FHA | more...
September 21, 2012
From time to time, we publish information about the FHA and HUD efforts to combat discrimination in housing. We don’t have new cases to report at this time, but some borrowers often wonder how FHA loan rules are designed to help prevent discrimination in a procedural way. It’s one thing to rely on existing or newly passed federal laws that forbid discriminatory practices in lending, housing, or home sales. It’s quite another to create rules and regulations that specifically work to prevent such illegal practices in the procedures of lending money. In some cases these anti-discrimination rules are more or less labeled and described as such; in others there are layers of subtlety involved, but it’s easy to see how they could be interpreted as an anti-bias requirement. A good | more...
September 19, 2012
The FHA and HUD recently updated condo project approval guidelines in the Mortgagee Letter 2012-18. The mortgagee letter states, “It was determined that certain policy adjustments were needed to address current housing market conditions”. The letter adds, “This ML is effective for all condominium project approvals,recertifications, annexations or reconsiderations submitted for review as of the date of this directive unless otherwise specified in a particular information block. This approval process will apply until August 31, 2014, unless further extended by FHA.” Part of the revised guidelines for condo project approval? Investor ownership rules. Under the section title, “Investor Ownership Section 2.1.4” you’ll find the following: “The requirements of Section 2.1.4, Investor Ownership are replaced by the following updated policy guidance. A unit that is occupied as a principal residence is | more...
September 18, 2012
The FHA and HUD have issued revised condo project approval guidelines for a number of areas, including the rules governing non-residential use of condo project floor space. According to Mortgagee Letter 2012-18, “This Mortgagee Letter (ML) puts in place temporary condominium project approval guideline changes to some of the current FHA condominium approval policy provisions.” The letter also says, “These changes replace, for the period specified by this ML, certain approval requirements specifically identified in this ML that were established in ML 11-22 and the attached Condominium Project Approval and Processing Guide (Guide). It was determined that certain policy adjustments were needed to address current housing market conditions.” (Emphasis ours.) A section of the mortgagee letter addresses the FHA rule on non-residential use and/or commercial use of condo space in | more...
September 14, 2012
A reader asks, “How long does it take a lender to let you know if you qualify for the FHA loan?” The answer to this question varies greatly depending on the lender. There are many factors that can play a part in the processing time for an FHA mortgage including the lender’s backlog of work waiting to be processed and other issues. But there is an FHA loan rule that states the lender does have a time limit to take action on your loan application. There is a 30 day time limit–the lender must act on your application within 30 days and inform you of that action. That’s not necessarily a mandate to have your loan approved in 30 days, and there are caveats to the 30 day rule which | more...