March 3, 2021

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Articles Published in: April 2012

FHA Loan Reader Question: Chapter 7 Bankruptcy and Foreclosure Actions

A reader asks, “I filed Chapter 7 in 2010 and only 1 item was included. I filed due to divorce in 2007 and ex spouse did not pay house payments and he was evicted in 1/09 and home was padlocked and forgotten about by B of A. After so many letters and calls B of A finally foreclosed on padlocked property in 2011 THREE YEARS later. I have great credit score of over 700+and would like to buy. I have been renting for over 3 years. Is


FHA Reverse Mortgages, Scams, and Required HECM Loan Counseling

There’s a special type of FHA home loan called the Reverse Mortgage, also known as a Home Equity Conversion Mortgage or FHA HECM loan for short. From the FHA official site, “If you are a homeowner age 62 or older and have paid off your mortgage or paid down a considerable amount, and are currently living in the home, you may participate in FHA’s Home Equity Conversion Mortgage (HECM) program.” The site also adds,


Steps To An FHA 203(K) Fixer Upper Loan

Some FHA loan applicants are interested in what the FHA calls “Handyman Specials” or “Fixer-Upper Loans” known as the FHA 203(K) mortgage. The FHA 203(K) is a loan guaranteed by the FHA, issued through a private lender for the purpose of buying and repairing property at the same time. There is a down payment requirement, which according to the FHA is “approximately 3.5%” of the purchase and repair costs. FHA 203(K) mortgages are available for those who intend to buy and occupy the property, but non-profit agencies and government entities can also apply. According to the FHA official site, there are a series of steps the borrower takes to apply for a 203(K) loan. First, the buyer finds a suitable property to purchase and repair. According to the FHA, both | more...


FHA Loan Credit Score Requirements

The FHA recently published “The Facts on FHA” on the official blog of the Department of Housing and Urban Development. One of the highlights of that post included a list of actions FHA and HUD have taken since 2009–more steps “to eliminate unnecessary credit risk and assure strong premium revenue flows than any Administration in FHA history” according to acting Federal Housing Administration Commissioner and Assistant Secretary for Housing, Carol Galante. One of the changes made by the FHA in recent times is an update to the required combination of FICO score requirements and down payments. According to Galante, “New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score | more...


FHA Loan Questions: Mortgage Insurance Payments

A reader asks, “I am refinancing my home with FHA. I am financing $54,540.00 and the appraisal (by FHA) is $180,000.00. Since I have almost $125,000.00 in equity why are they making me purchase FHA mortgage insurance at $50.00 a month? How long will I have to pay this on a 30 year loan at 4.25%?” Mortgage insurance, also known as MIP, is required by the FHA because it protects the government and the lender against a loss should the borrower default on his or her FHA loan. FHA requirements include mortgage insurance for borrowers making a down payment of less than 20 percent. Mortgage insurance is also required on refinance loans and is included in various rules governing FHA refinancing loans such as the following: “The lender must determine | more...


FHA Loan Reader Question: Septic Systems

A reader asks, “I am looking to buy a home in the middle of a suburban neighborhood that is the only house in the area (that we know of) that is on septic. Everyone else is on city sewer.” “Now if the FHA comes out with an appraiser to inspect the home/property, will they require that the home be hooked up to city? Or will they inspect the septic systems to make sure it’s in proper working condition? And will it pass if it is? And will they allow it to stay on septic?” Questions like this have a two-part answer. Part one is that local building codes and ordinances have much to do with the FHA appraiser’s decision. The home must live up to local code in order to | more...


FHA Loan Reader Question: Seller Contributions

A reader asks, “My question: if the purchase price of a home I want to buy is 290,000 the maximum sellers concession can only be a maximum of 6% of the agreed price? Can it be more than 6% if the home values at a greater than 290k ?”


FHA Loan Questions: FHA Condo Approval

A reader asks, “I own a unit in a condo building. I would like to buy another unit in the building, but I have been told by the board I cannot due to the FHA rule that not more than ten percent of the units in the building can be rented out.” “Of course if I bought the unit, I would then rent it out. Otherwise, the building could loss FHA financing.


FHA Kicks Off Fair Housing Month With Discrimination Settlements

The FHA and HUD begin Fair Housing Month by announcing settlements with lenders accused of violating the Fair Housing Act. Magna Bank and Home Loan Center have both settled with the FHA in cases where the lenders are accused of discriminating against women on maternity leave who had applied for home loans. According to a press release from the FHA/HUD, “The settlement agreement signed by Magna Bank requires the bank to pay one woman $14,085 for allegedly requiring her to return to work before her loan application could be approved. In another settlement agreement, Home Loan Center, Inc., agreed to pay a Las Vegas woman $15,000 for denying her application to refinance her mortgage because she was on maternity leave.” The Fair Housing Act, which went into effect 44 years | more...