Articles Tagged With: Mortgage Underwriting

December 14, 2011

FHA Energy Efficient Mortgages

Borrowers new to the FHA insured loan program should know about the FHA loan option called an Energy-Efficient Mortgage or EEM. An FHA EEM is intended to add a set amount to the FHA home loan in order to finance upgrades or improvements to the home that result in a more energy efficient property, which saves money over the long term. According to FHA loan rules, eligible properties for an EEM loan include, “New and existing one to four unit properties, including one unit condominiums and manufactured housing properties”. EEM loans are for new purchase transactions or refinancing, including the FHA 203(k) Rehabilitation Loan, FHA 203(h) loans for victims of natural disasters and standard FHA 203(b) loans. Borrowers who are purchasing multi-unit property should know an FHA EEM is calculated | more...

December 13, 2011

FHA Loans, Military Applicants, and Occupancy Rules

By Joe Wallace

There are many reasons why a military member could choose to apply for an FHA insured home loan instead of applying for a VA mortgage. Those reasons may include occupancy issues, personal choice when considering FHA loan fee structures versus VA insured mortgage fees, etc. The decision to purchase a home with an FHA mortgage instead of a VA loan could be influenced in part by language in the HUD document 4155.1, Mortgage Credit Analysis for Mortgage Insurance, which addresses occupancy issues. According to the VA official site Frequently Asked Questions list, occupancy rules for a VA Home Loan include a requirement that the veteran or spouse occupy the property bought with a VA insured loan as the primary residence: “Q: I am a single veteran stationed overseas and want | more...

December 12, 2011

FHA Loan Forbearance Rules For Unemployed Borrowers

By Joe Wallace

In July 2011, the Obama administration announced changes to the FHA loan program which requires lenders to extend FHA loan forbearance to unemployed borrowers. This change affects those who already have FHA mortgages rather than those applying for them; the new rules “require servicers to extend the forbearance period for unemployed homeowners to 12 months. The Administration also intends to require servicers participating in the Making Home Affordable Program (MHA) to extend the minimum forbearance period to 12 months wherever possible under regulator and investor guidelines.” According to the FHA press release announcing these changes, “These adjustments will provide much needed assistance for unemployed homeowners trying to stay in their homes while seeking re-employment. These changes are intended to set a standard for the mortgage industry to provide more robust | more...

December 7, 2011

What is an FHA 203(n) Mortgage Loan?

By Joe Wallace

As we’ve written in other blog posts, the most well-known FHA home loan is called the FHA 203(b). This is the mortgage loan product most FHA borrowers who are first time house hunters will apply for to purchase a home. But there are many other types of FHA home loans, including something known as the FHA 203(n). This is also known as a Single Family Cooperative Mortgage and according to the FHA, is designed to insure loans “for persons buying a unit in a cooperative housing project. The loan is made by a lending institution, such as a mortgage company, bank, or savings and loan association, and is insured by HUD’s Federal Housing Administration (FHA).” As with other FHA loans, the purpose of the FHA 203(n) Single Family Cooperative Mortgage | more...

December 2, 2011

HUD Offers Millions of Dollars in Housing Counseling Grants

By Joe Wallace

There are two times when potential or current FHA borrowers should seriously consider FHA-approved housing counseling help. First-time house hunters examining their FHA loan options should explore FHA/HUD approved counseling, as should anyone worried about going into default or foreclosure on an FHA loan, conventional mortgage or VA insured loan. FHA and HUD referred or approved counseling is often free depending on the type of counseling, All HUD-approved or referred foreclosure avoidance counseling is free, but other services such as required sessions for FHA HECM or Reverse Mortgages come with a fee. But FHA rules require approved agencies to offer free HECM and related counseling to borrowers who demonstrate financial hardship or need. In HUD press release 11-280, the agency announces more than $40 million in grant money to FHA/HUD | more...

November 29, 2011

FHA/HUD Disaster Relief for New Mexico Storm Victims

By Joe Wallace

Believe it or not, 2011 storm relief is still needed this late in the year–though the relief announced by the Department of Housing and Urban Development is for weather-related problems in New Mexico that happened during the month of August, not for natural disaster issues in the current month. According to the press release HUD No. 11-276, “U.S. Housing and Urban Development Secretary Shaun Donovan today announced HUD will speed federal disaster assistance to the State of New Mexico and provide support to homeowners and low-income renters forced from their homes following flooding in August.” Some readers will likely wonder why the assistance is only now being announced. According the press release, areas of New Mexico have recently been named as Federal Disaster Areas, allowing the FHA and HUD to | more...

November 18, 2011

FHA Home Loans: Is There a Minimum Square Footage Requirement?

By Joe Wallace

Some of the most frequently asked questions about FHA home loans involve the FHA’s minimum property requirements–the standards homes must be built or modified to in order to meet FHA approval. FHA minimum property requirements address basic issues such as safety–the property can’t be located near a high voltage easement, for example. But FHA minimum property requirements also address habitability concerns. All mechanical systems on the property must be in working order and be at the proper capacity to serve the home they are installed in. The FHA rules do not permit heating or central air conditioning systems that are too small to properly heat or cool the home, and electrical systems must be powerful enough to serve the entire building adequately. Areas of standing water in the basement are | more...

November 16, 2011

FHA Financial Report: 440,000 Families Helped Through FHA Refinancing Loans

By Joe Wallace

In a troubled economy, it’s easy to see why an FHA refinancing loan would be widely used–who doesn’t want to lower their monthly mortgage payments? Even in the best of times, a lower monthly commitment is attractive; when money is tight refinancing is on the minds of homeowners across the U.S. On Tuesday, November 15, 2011, the FHA and HUD released a financial report to Congress which included some figures that might surprise you. In 2011, the FHA “Served more than 1.2 million households and insured $218 billion in single-family mortgages, bringing the active single family portfolio to more than $1 trillion” according to an FHA press release. The press release, HUD No. 11-270, also noted that the FHA “…enabled more than 585,000 families to become homeowners for the first | more...

November 3, 2011

FHA Loans and Foreclosure Avoidance: Some Basics

By Joe Wallace

There have been several reader questions lately about the foreclosure process on FHA home loans. What options do FHA borrowers have when facing the risk of default and/or foreclosure on their FHA mortgages? A quick look at the FHA official site’s page on the subject of foreclosure avoidance at http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure reveals several options. One program known as HAMP is the Home Affordable Modification Program, which “lowers your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income to make your payments more affordable.” According to the FHA, a typical FHA loan modification under HAMP “results in a 40 percent drop in a monthly mortgage payment. Eighteen percent of HAMP homeowners reduce their payments by $1,000 or more.” Another program borrowers may consider is the Principal Reduction Alternative, | more...

November 3, 2011

FHA Loans and the Foreclosure Process

By Joe Wallace

Foreclosure is the worst-case scenario for home owners, but many don’t understand how the process works or at what point the FHA borrower may be in danger of losing his or her home. If you don’t understand how the foreclosure process works, but fear you may be nearing default or worse on your FHA mortgage, it’s definitely time to get educated about foreclosure and get in touch with your lender. FHA guidelines encourage borrowers to work closely with both the lender and the FHA to avoid loan default. What is the FHA timeline when it comes to missed payments and foreclosure proceedings? Many don’t understand how this works. Borrowers who miss a single payment face a serious issue, but there is still time to work out the problem and avoid | more...