Articles Published in: 2012

December 6, 2012

What You Need To Know About FHA Loan Occupancy Requirements

When a borrower applies for a single-family home loan to be guaranteed by the FHA, there are some occupancy rules which must be followed. According to the FHA official site, single-family home loans are for occupants, not investors. Consider the rules as stated in HUD 4155.1 Chapter 4, which include a requirement that at least one borrower obligated on the mortgage loan use the property as his or her “principal residence”. What does that mean? According to Chapter 4, “A principal residence is a property that will be occupied by the borrower for the majority of the calendar year.” The rulebook also says, “At least one borrower must occupy the property and sign the security instrument and the mortgage note in order for the property to be considered owner-occupied.” But | more...

December 5, 2012

New Hampshire Gets FHA/HUD Hurricane Sandy Relief

By Joe Wallace

New Hampshire is the latest state to receive FHA/HUD relief in the wake of Hurricane Sandy. On Monday, December 3 2012, the FHA and HUD issued a press release announcing foreclosure relief, FHA loans and refinancing plus other help for those recovering from storm damage. According to HUDNo.12-184, “U.S. Housing and Urban Development Secretary Shaun Donovan today announced HUD will speed federal disaster assistance to the State of New Hampshire in addition to resources being provided by FEMA and other federal partners. HUD will provide support to homeowners and low-income renters forced from their homes due to Hurricane Sandy.” Some may wonder why at takes time for all areas to get such disaster assistance from the FHA and HUD. The answer is simple–these benefits become available once an affected region | more...

December 4, 2012

FHA Loan Rules For Maximum Loan Amounts

By Joe Wallace

Borrowers new to the FHA loan program naturally want to know how much they may be permitted to borrow with an FHA guaranteed mortgage loan. While there is no single, fixed dollar amount maximum for the FHA loan program in general, there are rules and guidelines that govern how much a qualified borrower can get. The FHA loan rules are described in a publication called HUD 4155.1, which includes the following in FHA loan limits: “The statutory provisions of the National Housing Act establish the maximum loan limits and mortgage amounts for all FHA mortgage insurance programs. Maximum loan limits vary depending upon the • specific program under which a loan is insured • number of dwelling units in the property (one to four units), and • geographic location of | more...

December 4, 2012

HUD Charges Minnesota Condo Association With Discriminatory Policies

By Joe Wallace

There are plenty of options for those seeking FHA home loans who don’t want a home in the suburbs. Some want a condo unit, and while these types of loans can be a bit more complex due to certain requirements (FHA loan rules require condos to be on or added to a list of FHA approved projects) these types of loans are definitely available to qualified FHA loan applicants. Lenders prepare borrowers for the additional steps required in the condo loan process. What the borrower should not expect? Discrimination of any kind in that process. According to a recent press release on the HUD official site, “The U.S. Department of Housing and Urban Development (HUD) announced today that it is charging the homeowner association and property managers for an Edina, | more...

December 3, 2012

FHA Loan Rules For Multiple Residences: A Reader Question

By Joe Wallace

A reader asks, “Any person individually or jointly owning a home covered by an FHA- insured mortgage in which ownership is maintained may not purchase another principal residence with FHA insurance, except in certain situations as described in HUD 4155.1 4.B.2.d.” “What are the exemptions? FHA loan rules, as published in HUD 4155.1 Chapter Four, Section B, state: “To prevent circumvention of the restrictions on making FHA-insured mortgages to investors, FHA generally will not insure more than one principal residence mortgage for any borrower. FHA will not insure a mortgage if it is determined that the transaction was designed to use FHA mortgage insurance as a vehicle for obtaining investment properties, even if the property to be insured will be the only one owned using FHA mortgage insurance.” There are | more...

November 30, 2012

FHA Foreclosure Protection, Home Loans and Refinancing For West Virginia Storm Victims

By Joe Wallace

The FHA and HUD have issued yet another Hurricane Sandy press release, this time announcing assistance for home owners in West Virginia affected by Hurricane Sandy. According to HUDNo.12-181, U.S. Housing and Urban Development Secretary Shaun Donovan has announced that FHA/HUD will “speed federal disaster assistance to the State of West Virginia in addition to resources being provided by FEMA and other federal partners. HUD will provide support to homeowners and low-income renters forced from their homes due to Hurricane Sandy.” On Wednesday November 28, 2012, President Obama issued a disaster declaration for the following West Virginia counties: Barbour, Boone, Braxton, Clay, Fayette, Kanawha, Lewis, Nicholas, Pendleton, Pocahontas, Preston, Raleigh, Randolph, Taylor, Tucker, Upshur, Webster, and Wyoming. This federal disaster zone declaration allows HUD to offer foreclosure relief and other | more...

November 29, 2012

FHA Home Loan Foreclosure Avoidance Policy Changes

By Joe Wallace

Recently, the FHA issued a press release announcing changes to its loss mitigation and foreclosure avoidance policies. We’ve reported on some of those changes in previous blog posts; we haven’t yet covered the FHA’s revised loss mitigation options and changes to those policies. According to HUDNo.12-22, in the section titled “Updated Loss Mitigation Priority Order Requirements” you’ll find the following new policy information on how the FHA handles its loss mitigation options–described in order of priority. According to the FHA, “After evaluating a delinquent mortgagor for Informal and Formal Forbearance Plans, FHA’s Loss Mitigation options must be considered in the following order: (1) Special Forbearances; (2) Loan Modifications; and (3) FHA-HAMP.” How does this evaluation process work? The FHA explains, “Before four full monthly installments due on the mortgage have | more...

November 28, 2012

FHA Loans For Older Homes: A Reader Question

By Joe Wallace

A reader asks, “Can a borrower use an FHA loan for homes built in 1957?” We get many similar questions about FHA loan rules–does the FHA have any regulations that specify a home’s age as a factor in FHA loan approval? Not specifically. Instead, the FHA has guidelines that must be followed for the condition of the property–it must meet FHA minimum property standards and be compliant with state and local building code as applicable. There’s no single, centralized standard that can be cited for the age of a property; the FHA requires the home be safe, habitable, and meet other general requirements. One important factor to consider when viewing any property as a potential home is the property’s “remaining economic life”. A lender (or FHA rules) may preclude the | more...

November 27, 2012

FHA Foreclosure Avoidance Options

By Joe Wallace

In a recent Mortgagee Letter (ML2012-22), the FHA and HUD describe a variety of changes to FHA Loss Mititgation options. “Loss Mitigation” basically refers to foreclosure avoidance programs for borrowers in trouble on their FHA mortgages. The FHA Mortgagee Letter opens by stating, “No later than 90 days after issuance of this Mortgagee Letter, (November 16, 2012) mortgagees must begin to assess mortgagors in default under FHA’s loss mitigation priority order and policies referenced herein. FHA updates on its loss mitigation/foreclossure avoidance policies includes the following new requirements, as described below. According to the FHA, “Before a mortgagee considers a delinquent mortgagor for one of FHA’s Loss Mitigation Home Retention Options, the mortgagee must first evaluate the mortgagor for both Informal and Formal Forbearance Plans.” Additionally, “Informal and Formal Forbearance | more...

November 27, 2012

FHA and HUD Announce Extra Processing Time For Mortgages Affected By Hurricane Sandy

By Joe Wallace

On the FHA/HUD official site, borrowers will find a notice regarding the closing time requirements for loans affected by Hurricane Sandy. FHA loan rules have been temporarily modified to make exceptions for the normal closing time requirements for FHA borrowers in federally-declared disaster areas affected by Sandy. According to the FHA, ” In cases where there is no expectation of a material change in the loan application documentation, lenders closing on loans for properties located in Presidentially-Declared Major Disaster Areas affected by Hurricane Sandy will be granted an additional sixty days for all documents in the mortgage loan application at closing beyond the 120 days for completed construction or 180 days for new construction set out at HUD Handbook 4155.1 1.B.1.h.” Again, this announcement is only for what the FHA describes | more...