Articles Published in: April 2016

April 13, 2016

HUD Launches Improved Manufactured Housing Dispute Resolution Program

The Department of Housing and Urban Development has launched improvements to its manufactured housing dispute resolution program, according to a press release on the FHA/HUD official site. According to HUDNo.16-046, the program is designed to “help consumers and the manufactured housing industry to resolve disputes involving the purchase and installation of manufactured housing.” The HUD Office of Manufactured Housing Programs (OMHP) has created a new website for homeowners, manufacturers, retailers and installers to, “navigate the dispute resolution process in those states that do not have their own process” According to the press release, there are more than twenty states that don’t have their own manufactured housing dispute resolution programs. “HUD is updating its dispute resolution program in the following states: Alaska, California, Connecticut, Hawaii, Idaho, Illinois, Indiana, Iowa, Louisiana, Maryland, | more...

April 13, 2016

FHA Mortgage Rate Trends: Holding Steady

By Joe Wallace

Mortgage rates held steady on Tuesday, ahead of Wednesday’s Retail Sales Report and Thursday’s Consumer Prince Index report. These scheduled economic data releases can and do affect mortgage rates depending on investor reaction to the data in the reports; borrowers who are hoping for lower rates this week will have to contend with these releases as a potential spoiler for rates moving lower in the short term. Mortgage rates seem to be at the bottom of a range at present, so holding steady is good news, but upward movement (however small) is always likely depending on scheduled economic data releases, breaking news, or other factors that may affect the markets that influence mortgage loan rates. At the time of this writing, 30-year fixed rate conventional mortgages held steady at between | more...

April 12, 2016

FHA Loans And Your Debt-To-Income Ratio: What You Should Know

By Joe Wallace

A borrower’s debt-to-income ratio or DTI is an important calculation the lender must make when processing an FHA home loan application. Your monthly debts, compared to your lender-verified income, will help determine your acceptability as a credit risk and your ability to pay your mortgage. But how does the lender process your debt information to arrive at the ratio? HUD 4000.1 establishes guidelines for the lender to follow in order to establish the borrower’s DTI. On pages 249 and 250 we find the following: “The Mortgagee must determine the Borrowers monthly liabilities by reviewing all debts listed on the credit report, URLA, and required documentation. All applicable monthly liabilities must be included in the qualifying ratio.” Some types of debt may be omitted by the lender in certain cases. For | more...

April 11, 2016

Department of Justice Announces Settlement In Wells Fargo Improper Lending Practices Case

By Joe Wallace

The Department of Justice has announced a settlement in the improper lending practices case brought against Wells Fargo. According to a DoJ press release, “…the United States has settled civil mortgage fraud claims against Wells Fargo Bank, N.A. (Wells Fargo) and Wells Fargo executive Kurt Lofrano, stemming from Wells Fargo’s participation in the Federal Housing Administration (FHA) Direct Endorsement Lender Program. In the settlement, Wells Fargo agreed to pay $1.2 billion and admitted, acknowledged and accepted responsibility for, among other things, certifying to the Department of Housing and Urban Development (HUD), during the period from May 2001 through December 2008, that certain residential home mortgage loans were eligible for FHA insurance when in fact they were not, resulting in the Government having to pay FHA insurance claims when some of | more...

April 11, 2016

Mortgage Rate Trends: Near Best Levels All Year?

By Joe Wallace

With only one day last week with rates moving upward, we’ve seen mortgage loan interest rates hit territory better than we’ve seen for a good portion of 2016. Much of last week was either improvement, or holding steady following that improvement. On Friday rates didn’t move downward, but they definitely held steady. 30 year fixed rate conventional mortgage rates with some very competitive lenders were as low as 3.5% best execution, with many more offering a best execution 3.625%. FHA mortgage loan rates remained at 3.25% best execution, having moved out of a previous range with 3.5% at the top end (best execution). It’s not clear whether this rate will become a new comfort zone for FHA loans or if we’re seeing a short term trend only. As always, best | more...

April 8, 2016

FHA Loan Questions: Paying Fees

By Joe Wallace

A reader asks, “Is their costs in an FHA loan the the seller has to pay for the buyer, and if so what are those costs?” FHA loan rules in HUD 4000.1 permit “interested parties” to contribute a certain amount towards approved expenses of an FHA mortgage loan for a new purchase. The rules for these contributions are found starting on page 220, which has both a definition of the phrase, and the types of costs these parties may contribute. “Interested Parties refer to sellers, real estate agents, builders, developers or other parties with an interest in the transaction. Interested Party Contribution refers to a payment by an Interested Party, or combination of parties, toward the Borrowers origination fees, other closing costs and discount points.” FHA loan rules limit these | more...

April 8, 2016

FHA Loan Income Verification Rules: Military Income

By Joe Wallace

Military members and veterans have plenty of reasons why they might choose an FHA mortgage or refinance loan. Regardless of the reasons why you choose to go FHA, there are rules for military income verification you should know that will help both in the planning stages and when you’re submitting paperwork to the lender. To begin, military income is not simply defined as basic pay. Military pay can include a variety of things. HUD 4000.1 has a definition that clears up any ambiguity about the basic pay and allowances allowed to be included in the debt to income ratio once verified: “Military Income refers to income received by military personnel during their period of active, Reserve, or National Guard service, including: –base pay –Basic Allowance for Housing –clothing allowances –flight | more...

April 7, 2016

FHA Loan Income Standards: Stable and Reliable Income From Part Time Sources

By Joe Wallace

A reader asked us a question about FHA loan standards for income verification recently; “I was told today that my part time job could not be used because its not on a continuous basis. Is that true? I have worked this job part time for the last 4 years and its through out the year.” “Its home health care so I watch patients here and there throughout the year. As mentioned I have been employed there since 2012. Why will FHA not approve that income because I have not worked there in the last 30 days but Im still an employee. I also have a full time job.” FHA loan rules are very clear about the nature of part-time income when it comes to verifying it for the FHA loan. | more...

April 6, 2016

FHA Loan Rules: Documentation Standards

By Joe Wallace

Do you know the FHA loan standards for the age of documents associated with the loan and how those standards may apply to your loan? HUD 4000.1 has a list of requirements as well as certain exceptions to those requirements when it comes to the nature of the documents used to originate and approve the loan including appraisals, credit reports, and more. One of the most important rules in this area has to do with how documents are handled. For example, did you know that credit reports must come directly from the credit reporting agency and cannot be provided via the FHA loan applicant? Another rule in this area is that certain documentation may be acceptable in an electronic format, but such documentation is subject to state law and lender | more...

April 6, 2016

Mortgage Rate Trends: Decisively Lower

By Joe Wallace

Mortgage loan interest rates moved lower on Tuesday, putting them in a position close to lows we haven’t seen in a very long time. Part of the reason for the move lower has to do with Fed statements about the state of possible interest rate hikes (very cautious about them at this time) and part of the reason has to do with anticipated economic growth numbers among other factors. The move lower is, in the eyes of some market watchers, possibly a short term drop. With 30-year fixed rate conventional mortgage loan interest rates in a best execution range between 3.625% and 3.5% (among very competitive lenders), it’s definitely not a bad time to consider a mortgage rate lock. And for FHA borrowers who haven’t committed with the lender to | more...