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Articles Published in: October 2015

FHA Loan Income Verification Rules: Seasonal Employment

We’ve been examining FHA loan rules for income verification including requirements for full-time and part-time employment. But some FHA loan applicants have unique jobs that keep them employed on a seasonal basis. Does the FHA loan rulebook, HUD 4000.1, have provisions for these types of soon-to-be homeowners, too? According to the rules, participating FHA lenders may verify seasonal employment if it meets certain FHA standards. HUD 4000.1, Section II Part A includes the following, starting with a definition of “seasonal employment” as acceptable to the FHA: “Seasonal Employment refers to employment that is not year round, regardless of the number of hours per week the Borrower works on the job.” The FHA instructs the lender, “The Mortgagee may consider Employment Income from Seasonal Employment as Effective Income if the Borrower | more...

 
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HUD Proposes New Anti-Housing Discrimination Rule

The Department of Housing and Urban Development has issued a press release about a proposed new rule that would create new, formal and standardized claims procedures for discrimination complaints in connection with housing transactions. HUDNo.15-136 was released Wednesday, October 21, 2015, stating, “The U.S. Department of Housing and Urban Development announced today that it is issuing a proposed rule that would formalize standards for victims of harassment in housing to bring claims under the Fair Housing Act.” HUD’s proposed rule, called Quid Pro Quo and Hostile Environment Harassment and Liability for Discriminatory Housing Practices under the Fair Housing Act, was published in the Federal Register and is open to comments by the public for a limited time. “A home should be a refuge where every woman and man deserves to | more...

 
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FHA Loan Rules For Income: Part Time Employment

The new FHA single family home loan program policy handbook, HUD 4000.1, has a section on income verification rules that includes instructions to the lender on how to include part-time income in the FHA loan applicant’s debt-to-income ratio. HUD 4000.1 makes an important distinction between full-time income and part-time earnings, and borrowers need to understand how FHA loan rules make the distinction. When it comes to full-time work, HUD 4000.1 Part II Section A states: “Primary Employment is the Borrowers principal employment, unless the income falls within a specific category identified below. Primary employment is generally full-time employment and may be either salaried or hourly.” For part-time income, the rules say: “Part-Time Employment refers to employment that is not the Borrowers primary employment and is generally performed for less than | more...

 

Mortgage Loan Interest Rate Trends: Recovering After A Move Higher

On Tuesday, mortgage loan rates moved a bit higher, then recovered on Wednesday. These are basically small adjustments and loan applicants may, where applicable, find the difference in closing costs rather than an actual higher or lower rate. At the time of this writing, 30-year fixed rate conventional mortgage loans were still offered by many lenders at a best execution rate between 3.75% and 3.875%. The reason for the downward movement on Wednesday included improvements in the bond markets that affect mortgage loan rates, but there’s some European economic data due for release on Thursday that could, depending on report contents and investor reaction to that report, put pressure on rates. FHA mortgage rates are still being quoted at 3.5% best execution, though as usual we like to remind our | more...

 

FHA Loan Rules: Frequent Changes of Employment

HUD 4000.1, the recently published Single Family Home Loan policy rule book, has either reprinted, revised, updated, or restated FHA loan policy for all single family home loan transactions. That’s why we’re examining some of the most important-to-the-borrower sections of the new rules–bringing you the latest FHA requirements so you can make informed decisions about your FHA loan or refinance loan. One area we get asked questions about on a regular basis is FHA loan policy toward borrowers who have recently changed jobs, or frequently change jobs due to the nature of their work. How do FHA loan rules address such issues? The answers, found in HUD 4000.1, Section II, Part A, include the following introductory statements about borrowers with frequent or recent job changes: “If the Borrower has changed | more...

 

FHA Loans, HUD 4000.1, and HUD/FHA Mortgagee Letters

We’ve written a great deal lately about the new FHA Single Family Home Loan policy handbook, HUD 4000.1. Since this was launched, it became the comprehensive reference for FHA loan policy for single family mortgages, refinances, etc. The old FHA loan rulebooks including HUD 4155.1 and HUD 4155.2 are still discoverable on the Internet and on the FHA/HUD official site, but they are included there for reference only and should not be taken as current FHA single family loan policy. But even with that in mind, one FHA/HUD practice that was active under the era of the previous policies and handbooks still remains–the FHA and HUD are still updating single family home loan policy (and others as appropriate) with FHA Mortgagee Letters (ML). While the FHA/HUD did publish a list | more...

 

Mortgage Rate Trends: Holding Steady For Now

Monday saw mortgage loan interest rates hold steady after the weekend, keeping things more or less where they’ve been since Thursday. That keeps 30-year fixed rate conventional mortgages, best execution, in the 3.75% to 3.875% range we’ve been talking about for three days now. At the time of this writing, FHA mortgage loan rates are holding steady at 3.5% best execution, and the longer they stay the more it seems this is the new comfort zone (again, best execution) for FHA mortgage loan interest rates. Keep in mind that FHA rates may vary more among participating lenders, so it is a very good idea to shop around for the most competitive rates. And as always, “best execution” refers to situations where the loan applicant is extremely well-qualified, with outstanding FICO | more...

 

FHA Loan Rules: Self Employment Income

Ever since the FHA and HUD published the new guidelines for single-family home loans, HUD 4000.1, we have been reviewing the new rules and discussing important issues as the new rules affect them. One of these areas has to do with income verification for credit-check-required FHA mortgages and refinance loans. The last time we discussed the FHA loan rules on income verification for self-employed borrowers, the old FHA loan rulebooks HUD 4155.1 and HUD 4155.2 were still in effect. What does HUD 4000.1, which supersedes all previous FHA loan rules for single family mortgage loans, have to say about borrowers who are self-employed? For a start, the FHA defines what it means by “self employment income”: “Self-Employment Income refers to income generated by a business in which the Borrower has | more...

 
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Fair Housing Laws: Support Animals And Discrimination

On the FHA/HUD official site this week there was a press release announcing HUD charges against New York City landlords for alleged discriminatory housing practices involving tenants with support animals. According to the press release HUDNo. 15-129, “The U.S. Department of Housing and Urban Development (HUD) announced today that it is charging the owners and landlords of a high-rise complex in New York City with violating the Fair Housing Act by refusing to allow a resident with disabilities to have an emotional support animal. HUDs charge alleges that Friedman Residence, LLC (formerly called the Aurora), Common Ground Management Corporation, and The Actors Fund of America refused to accept that the resident required a dog to cope with the symptoms of his disability.” The HUD press release adds that Fair Housing | more...

 

CFPB Updates Home Mortgage Disclosure Act

Friday October 15, 2015, the Consumer Financial Protection Bureau (CFPB) announced it is updating mortgage loan regulations–specifically the Home Mortgage Disclosure Act (HDMA)–to make the home loan process more transparent and easier to understand. According to the to the CFPB official site, HMDA requires, “many financial institutions to collect, report, and disclose information about their mortgage activity. The original law was enacted by Congress 40 years ago to respond to concerns that some banks may be failing to serve their communities.” HMDA, the press release states, is a statute that provides “the public and policymakers with information about the mortgage market and ensures market transparency.” What does the HDMA do? According to the Consumer Financial Protection Bureau, it: –Helps to show whether lenders are serving the housing needs of their | more...