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Articles Published in: April 2011

April 12, 2011

FHA Announces Settlement with First American Mortgage Trust

By Joe Wallace

On many occasions, we’ve discussed the FHA’s aggressive pro-consumer policies. When a borrower decides to apply for an FHA insured loan, there is plenty of legal protection against discriminatory lending practices. But the FHA doesn’t just look after the borrower’s interests–it also polices the industry where appropriate to insure a level playing field for all involved. The FHA has standards for fair lending, there are laws designed to promote equal access to credit for qualified borrowers, and there are also requirements to protect the FHA’s investment against lenders who are tempted not to exercise due diligence in making sure those borrowers are indeed qualified. A good example of this is the recently announced settlement between the FHA mortgagee review board and First American Mortgage Trust. According to an FHA press | more...

 

April 11, 2011

FHA Streamline Refinancing Rule Changes In Full Effect This Week

By Bruce Reichstein

In February 2011, the FHA and HUD issued an announcement about changes to the Streamline Refinancing program. Many alterations to the program were made, some effective immediately when the guidance was issued in February, other changes were designed to be implemented no later than 60 days from the date of Mortgagee Letter 2011-11, February 14th. One of the important changes in that letter affects FHA non-credit qualifying streamline refinancing. The FHA and HUD wanted to have greater risk control over the FHA insurance fund; the FHA determined stronger rules were needed to safeguard FHA streamline loans. According to the mortgagee letter, “mortgagees must not use an appraisal to increase the insurable mortgage balance beyond the sum of the outstanding principal balance and the new Up-Front Mortgage Insurance Premium.” The new | more...

 

April 8, 2011

April Is “Fair Housing Month”

By Joe Wallace

The FHA and HUD are promoting April as Fair Housing Month to raise awareness of borrower’s rights. Fair Housing Month is also meant to make people more aware of the government’s efforts to work toward a discrimination-free environment FHA, VA and conventional loan applicants can buy real estate in. In addition, HUD is running a year-long “Live Free” campaign highlights the message of the Fair Housing Act including rights and responsibilities on both sides of the bargaining table. According to a HUD press release, “The “Live Free” campaign will run throughout the year and include Facebook ads, targeted print ads, digital videos, and podcasts that draw attention to the different types of discrimination HUD and its partner agencies see today, including discrimination against lesbian, gay, bisexual and transgender individuals.” According | more...

 

April 7, 2011

More on FHA Loans for More Than One Home

By Joe Wallace

In recent posts, we’ve discussed the FHA rules for borrowers who want to apply for a second FHA insured loan in addition to the one they already hold. Generally speaking, the FHA does not allow people to have two FHA home loans at the same time, but there is a degree of flexibility in the rules–borrowers who want to buy a second home with an FHA mortgage are only allowed to do so under specific circumstances. For example, someone who relocates to a new area that is not within a reasonable commuting distance from the first home may be allowed to apply for an FHA loan to purchase a second property. The same is true when a home owner outgrows the first home because it no longer has room for | more...

 

April 6, 2011

FHA Loans: Can A Borrower Have More Than One? (Part Two)

By Joe Wallace

In our last blog post we discussed FHA loans and whether a borrower can apply for a second one while maintaining the first. This situation is different than refinancing or getting a second mortgage–the situation in question involves the borrower’s ability under FHA regulations to buy another property with a new FHA insured loan. The FHA only allows this under specific circumstances. For example, a borrower who relocates to a new area outside a “reasonable commuting distance” may be allowed to apply for a second FHA loan to buy a new property in the new location. In such cases the borrower is allowed to apply for a new loan but isn’t forced to sell the old property. This makes the old home a possible rental unit under the right circumstances–the | more...

 

April 6, 2011

FHA Loans: Can a Borrower Have More Than One?

By Joe Wallace

For the typical home owner, applying for an FHA loan is a major financial commitment. The monthly mortgage payments are an important part of any budget and borrowers are encouraged to plan carefully before closing the deal to make sure they will be able to afford the loan over the lifetime of the FHA insured mortgage. Some FHA borrowers have circumstances that get them thinking about a second FHA loan for any number of reasons. Some borrowers decide to invest in real estate, others may be required to relocate to another state for career purposes, others may be non-occupying co-borrowers on an FHA loan. Can a borrower have more than one FHA loan at a time? On the surface, the FHA answer seems to be no. According to the FHA, | more...

 

April 5, 2011

FHA Home Loan Flood Insurance Rules

By Joe Wallace

In March 2011, FHA rules changed for properties located in special flood zones or near coastal areas. In the past, the FHA had “strongly encouraged” mortgagees to get a flood zone determination independent of any appraisal; now FHA rules make flood zone determination a requirement for properties. FHA Mortgagee Letter 2010-43 says “FHA now requires that all Mortgagees obtain a flood zone determination on all properties instead of strongly encouraging such action.” FHA adds, “lenders are now “required to obtain life-of-loan a flood zone determination services, certification independent of any assessment made by the appraiser…” Flood zone determination can affect a property’s eligibility for an FHA loan, depending on the circumstances. For example, you may be able to apply for an FHA insured mortgage on a home in a special | more...