September 24, 2015
The FHA Single Family Home Loan policy handbook, HUD 4000.1, contains a variety of changes, updates and other alterations to FHA loan policy. In many cases, FHA loan rules for new purchase loans and refinance loans may have stayed the same, in other cases there are slight (or more substantial) revisions to FHA policy.
One set of frequently asked questions about this new handbook and revised policy centers around FHA refinance loans. For example, one section of the new handbook that governs refinance loan transactions discusses what policy FHA has when the borrower’s name is on the title of the property but not listed on the mortgage secured by that property. Does the borrower qualify for an FHA refinance loan in such cases?
According to a Frequently Asked Questions list found on the FHA/HUD official site has the answer:
“FHA policy requires that at least one Borrower on the refinancing Mortgage must hold title to the Property being refinanced prior to case number assignment.”
“The borrower must meet the eligibility and occupancy requirements, and the property must meet the property eligibility requirements, and all other program specific requirements for the refinance type requested. Program specific refinance requirements can be located in 4000.1 II.A.8.d.”
One area where the new rule book is “silent” on the issue of whether a non-occupant co-borrower can be added to an FHA cash-out refinance loan transaction. In the frequently asked questions list, “Is this intentional?” comes up with regard to that issue as it appears to be a change from previous policy statements. FHA/HUD reply:
“The change is intentional. A non-occupant co-borrower may be added to a cash-out refinance; however Income from a non-occupant co-Borrower may not be used to qualify for a cash-out refinance.”
We’ll examine other questions from this and other sections of the FHA/HUD FAQ about the new rule book in future blog posts.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It is designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.
It is easy to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:http://www.fha.com/fha_loan_limits_widget
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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