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Articles Published in: March 2011

What Does “Buying a HUD Home” Mean?

The FHA loan program features a variety of loan products for qualifying borrowers to get into affordable housing by applying for a loan with an FHA guaranty. But the FHA doesn’t just guaranty loans, it also offers house hunters the option of purchasing property owned by the Department of Housing and Urban Development, also known as a “HUD home”. According to the FHA official site, “A HUD home is a 1-to-4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim.” HUD homes are available to the public–not just FHA borrowers. Anyone may purchase a HUD home but getting one is a different process than | more...


FHA Loan Facts About Loan Applications

If you’re new to the FHA loan process, there are many things to learn, and it’s easy to assume things about an FHA mortgage that might not be true. Did you know there are federal laws that require specific steps


FHA Loans and Fair Lending: The Schwab Settlement

Recent headlines and press releases have called attention to the Fair Housing Act, and the FHA’s anti-discrimination policies for FHA loan applicants. The Department of Housing and Urban Development recently announced a settlement between Charles Schwab Bank and a Louisiana family after a Fair Housing Act complaint. FHA loan applicants and conventional borrowers alike are protected from discriminatory housing practices under the Fair Housing Act, which includes refusal to issue loans based on an applicant’s disabled status. According to a press release at FHA.gov, “Charles Schwab Bank has agreed to pay $30,000 settling allegations that the bank refused to accept a loan application from the adult son of a Metairie,


FHA Refinancing Loans-Rule Clarifications

In February of 2011, the FHA released clarification to its rules covering FHA Streamline Refinancing Mortgages, designed to be implemented 60 days from the issuance of FHA Mortgagee Letter 2011-11, sent on February 14, 2011. The FHA clarified rules for the Streamline Refinancing Loan, which previously had language requiring specific, tangible benefits to the borrower such as a reduction in interest rates or monthly mortgage payments. There is still a requirement for FHA Streamline Refinancing Loans to have a specific benefit to the borrower, but the FHA


FHA Refinance Loans–Can I Include Closing Costs Into a Streamline Loan?

FHA Mortgagee Letter 2011-11 issued several changes and policy clarifications to refinancing loans. FHA borrowers with existing mortgages should be aware of these changes as they can affect a borrower’s planning when it’s time to consider refinancing a home with streamline or cash-out FHA loan products. One of the changes, scheduled to take effect in mid-April 2011, alters the way closing costs, pre-paid items, discounts and other items are paid for during some types of FHA refinancing. According to the new FHA guidelines, “The mortgagee may not add closing costs, discount items, prepaid items, or other financing costs to the new loan balance.” This applies to borrowers who seek “Non-Credit Qualifying Streamline Refinances” like an FHA Streamline loan. The policy also states, “As a means of controlling risk to FHA


Who is Considered a First-Time Homebuyer for FHA Loans?

There are many loan programs designed specifically to help first-time home buyers. Conventional loans may have special rates for first-timers, the VA offers a lower funding fee on its mortgage loans for first time home buyers, and the FHA is specifically dedicated to helping the first time house hunter make the right choices on a new home purchase. New house hunters might not know, for example, about the Affordable Housing Program or Homeownership Set-Aside Program, created to help low income and middle-income buyers with FHA-approved down payment assistance. There are also state and local programs for first time home buyers and low-income house hunters the FHA can help qualified borrowers apply for. But what does the FHA consider to be a “first time home buyer”? According to the rules, a | more...


FHA Loans: How Long Until I Can Apply For Cash Out Refinancing

In February 2011, the FHA released modifications and clarification for a number of policies related to FHA refinancing loans including FHA Streamline Refinance and Cash-Out Refinancing loans. Some of the changes were scheduled to take effect 60 days after the release of FHA Mortgagee Letter 2011-11, while others are listed as “effective immediately.” For example, effective immediately the FHA requirements for Streamline Refinancing were clarified to include instructions to the FHA loan officer regarding how long a borrower must wait from the time an FHA insured mortgage is issued and the application date for Streamline Refinancing. FHA Streamline loans, where no money is paid directly to the borrower, require at least six full months since the first payment due date on the original mortgage.


More on Title I Loans and Manufactured Homes

FHA Title I loans for manufactured homes can be used several ways–one is to apply for an FHA loan to purchase the home itself, another is to apply for a mortgage loan to purchase a lot for a home already owned or to be purchased, and the Title I loan can also be used to buy a manufactured home and lot combination. When borrowing money for a manufactured home under Title I, there quality standards the home must live up to, including wall thickness, foundation footing, and approved construction materials. “Manufactured homes must comply with the Model Manufactured Home Installation Standards, and all applicable state and local requirements” to include the construction/installation of the foundation system. In addition to the Model Manufactured Home Installation Standards, there’s another set of standards. | more...