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Articles Published in: October 2014

HUD Settles “Redlining” Discrimination Complaint

Have you ever wanted to apply for an FHA home loan only to experience what may be illegal discrimination forbidden by the Fair Housing Act? In some cases the discrimination may not even reach the borrowers themselves, as evidenced by a recent settlement announced by the HUD official site. According to a October 2014 press release issued on the FHA/HUD official site, “The Department of Housing and Urban Development (HUD) announced today that it has negotiated a Conciliation Agreement with Illinois-based Midland States Bancorp, resolving allegations that the bank avoided doing business in predominantly African American and Hispanic neighborhoods in St. Louis, Missouri and northern Illinois.” Federal Fair Housing Act laws state that it is illegal to, “deny or discriminate in the terms and conditions of a mortgage or loan | more...

 

FHA Loan Reader Questions: Cisterns

A reader asks,“I am planning to sell my Manufactured Home on a permanent foundation in So. California. Water to the home is provided by a well on the property. Due to a drought in the area for the last 5 years my well still works but is not producing enough water for my usage.” “To remedy this problem I have had a 5,000 gallon storage tank installed on the property with q booster pump that serves the home. I have a water truck bring me “city water” to fill the storage tank when I need it to supplement the low producing well. This arrangement works totally fine. My question is: will this situation prevent a qualified buyer from being approved for an FHA loan to purchase the property?” FHA loan | more...

 

FHA Loan MIP Rules: A Reader Question

A reader asks, “We acquired FHA loan last April 2010 and refinanced it twice. Our original loan was 410k and our current bal is 383k. How can we eliminate the MIP and loan APR is 3.25%.” Last year, FHA Mortgagee Letter 2013-04 announced changes to FHA loan policy for mortgage insurance premiums. That policy was altered to require MIP payments for the maximum duration allowed by law on FHA loans. According to the FHA official site: “For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute. See 12 U.S.C. § 1709(c)(2)(B).” “For all mortgages regardless of their amortization terms, any mortgage involving an original principal obligation (excluding financed Up-Front MIP (UFMIP) less than or | more...

 

FHA Loans, Projected Income: A Reader Question

A reader got in touch with a question related to our post “FHA Loan Answers: New Job Income” which included the following: “Many FHA loan applicants want to know if taking a new job will affect their chances at FHA loan approval. FHA loan rules are designed to help guide loan officers through the qualification process for a variety of scenarios including those where the borrower may have “projected income” that could be factored into the borrower’s debt-to-income ratio. What do FHA loan rules say about projected income? How is it defined? The answers to these questions and more can be found in HUD 4155.1 Chapter Four, Section E. “Projected income is acceptable for qualifying purposes for a borrower scheduled to start a new job within 60 days of loan closing | more...

 

FHA Mortgage Rate Loan Trends For The Week Ending Friday October 3 2014

For entire year to date, September was one of only a handful of months that had consistently upward movement in mortgage loan interest rates. Many house hunters and investors welcomed the end of September after some steady upward pressure on rates that finally started slacking off toward month’s end. FHA mortgage rates at the end of the month have seen small improvements but this week marked a push back to the summer’s lows. FHA mortgage rate trends were up and down the week ending October 3, 2014; rates pushed slightly higher on the last day of the month, but the first day in October brought with  it more improvement in rates that had started off small in the second half of September. The first day of October helped erase most, if | more...

 

FHA Loans After Bankruptcy and Foreclosure: A Reader Question

A reader got in touch with us recently with a lengthy question. We won’t run the entire correspondence, but the question goes as follows: “I filed Bankruptcy over 3 years ago and it was discharged in June of 2011. Included in that Bankruptcy was the current house we had purchased. On my credit report it clearly shows that the loan to that property was part of the bankruptcy and was discharged in June of 2011. We are trying to buy again under an FHA Loan and we were almost done when the underwriter found that the deed to the property we included in the bankruptcy did not get changed out of our name and into the bank’s name until…22 months later.” “We were denied financing because that only left us | more...

 
FHA Loan Credit Score

FHA Loan Credit Report Requirements

When you apply for a home loan, it helps to know what the lender is looking for from your credit report. When it comes to FHA mortgages, the lender wants to see 12 months of on-time payments on your financial obligations as well as the actual numbers of your credit scores as reported by the three major credit reporting agencies. But what does the FHA require from those credit reports? What does the lender need in order to properly document you as a good credit risk? The FHA loan rules for credit report delivery and content are found in HUD 4155.1 Chapter One Section C. A quick glance at this section reveals that credit reports cannot be delivered to the lender from third-parties including the borrower. The credit reporting agency | more...

 

FHA Single-Family Home Loan Occupancy Rules

FHA loan rules for single family home loans include an occupancy requirement. This requirement is designed to encourage single-family borrowers and exclude investors from using single-family FHA mortgage loans to purchase investment property. Why? The intent of the single-family home loan program is to help eligible borrowers get into affordable housing using a low-cost, lower-than-conventional loan interest rate. These rates are not intended to help investors buy property for non-occupying rental or outright sale. What are the FHA loan rules for occupancy? The full explanation of the rules can be found in HUD 4155.1 Chapter Four Section B, which starts off by defining what a “principal residence” is. A home purchased with a VA mortgage is required to be used as the principal residence, so it’s good to know what | more...