Articles Published in: November 2011

November 30, 2011

FHA Loan Loan Limits and Non-Occupying Co-Borrowers

If you’re buying a single-family home with an FHA insured mortgage, FHA loan rules require you to certify the property will be your primary residence. But FHA loans do permit a loan with co-borrowers who do not plan to occupy the property. Chapter Three of FHA Handbook 4155.1 states, “A non-occupying borrower transaction involves two or more borrowers where one or more of the borrower(s) will not occupy the property as his/her primary residence.” This in mind, borrowers should know that there is a different FHA maximum mortgage permitted for a non-occupying borrower transaction in many circumstances. “When there are two or more borrowers, but one or more will not occupy the property as his/her principal residence, the maximum mortgage is limited to 75% loan-to-value (LTV).” However, the rules do | more...

November 29, 2011

FHA Help Available For Those At Risk of Foreclosure

By Joe Wallace

The FHA encourages borrowers worried about going into default or foreclosure on their FHA mortgages to seek help as soon as possible. The earlier a borrower acts, the better chance he or she has of saving the home and preventing damage to credit and other issues. One of the most important thing a borrower can do is to get Foreclosure Avoidance Counseling as early as possible The FHA and the Department of Housing and Urban Development offer help in this area; the FHA official site says, “HUD-approved housing counseling agencies are available to provide you with the information and assistance you need to avoid foreclosure. As part of President Obama’s comprehensive Homeowner Affordability and Stability Plan (HASP), you may be eligible for a special Making Home Affordable loan modification or | 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 28, 2011

FHA Rules For Credit Reports and Tax Returns

By Joe Wallace

Part of the FHA loan application process includes the lender running a credit check on the applicant. Depending on the type of loan and other factors, the lender may also need to contact current and/or former employers, landlords and other people who can verify income and employment data given on the FHA loan application form. Some borrowers, including those who are self-employed, freelance or small business owners may be required to furnish additional data including tax returns, business statements and other information which can help the lender establish a history of income, credit, and employment. Some of this information is provided by the FHA borrower, some is provided by third parties (such as employment and income details) and some must come from official sources. For example, tax returns must be | more...

November 25, 2011

HUD Rules Proposed To Refine Fair Housing Laws

By Joe Wallace

Those applying for FHA home loans for the first time soon learn about the wide range of federal laws enacted to insure fair treatment in the lending and housing markets. But according to Department of Housing and Urban Development Secretary Shaun Donovan, those laws need to be modified to be more inclusive. In Donovan’s official HUD blog, he writes, “…I

November 23, 2011

FHA Title I Loans: The Basics

By Joe Wallace

Many FHA borrowers are interested in home improvement loans or rehab loans. In addition to the FHA 203(k) Rehabilitation Loan program, the FHA and HUD offer something called the Title I loan. According to FHA.gov, “The Title I program insures loans to finance the light or moderate rehabilitation of properties, as well as the construction of nonresidential buildings on the property. This program may be used to insure such loans for up to 20 years on either single- or multifamily properties. The maximum loan amount is $25,000 for improving a single-family home or for improving or building a nonresidential structure.” For multi-family unit, there is also an FHA Title I loan, with a maximum of $12,000 per family unit, “not to exceed a total of $60,000 for the structure.” FHA | more...

November 22, 2011

FHA Loans, Escrow Accounts, and the Real Estate Settlement Procedures Act

By Joe Wallace

If you’re new to the home buying process, chances are good you’re learning plenty of new things about banking, the loan process, and escrow accounts. An escrow account is often required by lenders as part of an FHA home loan in order to pay property taxes, home insurance and other required expenses. But what are the rules governing escrow and what should the borrower know? To begin, the Real Estate Settlement Procedures Act or RESPA states that escrow is NOT mandatory as a condition of applying for an FHA home loan. That said, the lender is free to require an escrow account–but the FHA does not insist upon one. When a lender does require money to be held in escrow, the financial institution is limited by RESPA–there’s a maximum calculation | more...

November 21, 2011

Higher FHA Loan Limits For High-Cost Counties Reinstated By Congress

By Joe Wallace

In August of 2011, the FHA and HUD issued a press release announcing changes to the FHA loan limits for high-cost counties across the nation. According to press release HUD No. 11-170, “On October 1, 2011, the Federal Housing Administration (FHA) will implement new single-family loan limits as specified by the Housing and Economic Recovery Act of 2008 (HERA).

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 17, 2011

HUD Clarifies Disaster Relief Rules To Avoid Duplication of Benefits

By Joe Wallace

Earlier this year, we posted on the assistance available to FHA borrowers in the wake of natural disasters in order to avoid FHA loan default, begin the repair and recovery process and deal with insurance claims. On November 17, the FHA and HUD have issued new clarification guidance for disaster recovery benefits. According to HUD press release No. 11-271, the new rules are designed to “ease the burden of complying with federal law prohibiting so-called