Articles Published in: October 2016

October 6, 2016

FHA Loan Employment Rules: Fact and Fiction

FHA home loan employment rules can be easily misunderstood. There is some confusion over the basics of FHA loan policy regarding employment and how that employment must be verified by the lender. One of the most common fictions about FHA mortgage loans is that the rules supposedly require a borrower to be with their current employer for two years or more. This is not true. But there IS a two-year benchmark the FHA uses with respect to employment, as we learn in HUD 4000.1: “For all Employment related Income, the Mortgagee must verify the Borrowers most recent two years of employment and income…” Note that there is no specification for that two years to be with the same company or boss. HUD 4000.1 adds, “Direct verification of the Borrowers employment | more...

October 5, 2016

Cash To Close For FHA Loans: Some Rules

By Joe Wallace

One commonly asked question about FHA home loans involves how the lender verifies the borrower’s sources of cash to close the loan. FHA loan rules in HUD 4000.1 require the lender to verify all sources of cash to close (including your down payment) and when dealing with this requirement the first time, some loan applicants are surprised when the lender asks for specific details such as account numbers, bank statements, etc. In an age where cyber fraud, phone scams, and “phishing” for account numbers make headlines on a near-daily basis, it’s not surprising that bank customers would question a lender’s request for account numbers and other financial data. A version of a common question in this area goes like this: “My lender says she needs verify my cash reserves and | more...

FHA Loans And Natural Disasters: What You Should Know

October 5, 2016

Cash To Close: Investments, Private Savings Clubs

By Joe Wallace

In our last blog post we discussed FHA loan closing costs and down payments-specifically the rules found in HUD 4000.1 that governs the sources of the funds for cash to close (down payments and closing costs). The lender is required to verify the source of all funds for down payments and closing costs, and the procedure can vary depending on the source of the funds, lender standards, state law, etc. Last time we examined the rules for funds that come from savings and checking accounts, but these aren’t the only types of sourcing options. For example, cash to close may come from investments such as stocks or bonds, or money saved up in private savings clubs. HUD 4000.1 instructs the lender on how to proceed with these types of sources. | more...

October 4, 2016

FHA Loan Facts And Fiction: First Time Home Buyers

By Joe Wallace

First time home buyers come to the FHA loan process with many questions. There are some long-held misconceptions about FHA mortgages that borrowers should know long before they fill out a loan application. Let’s examine some of them. One myth about FHA loans, and one of the most common, is that the FHA itself lends money to loan applicants. This is not true. Instead, the borrower must find a participating FHA lender, who has been certified by the FHA to issue home loans under the FHA single-family loan program. Another misconception has to do with the nature of the FHA loan program itself, which offers affordable home loans to all qualified applicants regardless of their status as a home buyer. That means that first time home buyers and those who | more...

October 4, 2016

HUD Charges Manhattan Condo Owner With Fair Housing Act Violations

By Joe Wallace

When purchasing a condo unit with an FHA mortgage, borrowers may be subject to additional legal commitments associated with condo association agreements, which many condo purchasers must agree to as a condition of the purchase of their property. But sometimes the provisions of those agreements can, depending on how they are interpreted, run afoul of the Fair Housing Act. One such case came to light recently on the Department of Housing and Urban Development’s official site in a recent press release titled. According to HUDNo.16-151, “The U.S. Department of Housing and Urban Development (HUD) announced today it is charging a Manhattan property owner with violating the Fair Housing Act by discriminating against a resident with disabilities who required the use of an assistance animal.” Under the Fair Housing Act, those | more...

October 3, 2016

HUD Awards Millions To Promote Fair Housing

By Joe Wallace

Fair Housing laws affect house hunters and potential FHA loan applicants at all levels of their search for housing. Whether you are ready to fill out a loan application to purchase property, or need to rent an apartment as an interim solution while you search for a home, Fair Housing laws are there to protect borrowers from discrimination in the housing process. The Department of Housing and Urban Development has announced a $38 million initiative designed to help national and local agencies fight housing discrimination. The funding will support more than 100 agencies. “This year, HUD provided competitive funding under three notices to organizations that support a wide range of fair housing enforcement, education and outreach activities” says the press release HUDNo.16-150, which adds, “These grants allow the groups to | more...

October 3, 2016

Mortgage Loan Rate Trends: Mixed

By Joe Wallace

Mortgage loan interest rates closed mixed on Friday, gaining back some ground after a couple of days of slightly higher movement. Overall, last week was a bit of a tug-of-war, but on Friday best execution rates are still reported at levels we’ve seen all week, with minor ups and downs likely being reflected in closing costs rather than actual rate changes depending on the lender. 30-year fixed rate conventional mortgages ended Friday at 3.375%, best execution. Market watchers noted on Friday that some lenders marked up, some marked down, and it’s likely that some also stayed the same from Thursday. Bond market activity is a player in the Friday numbers, but how that factors into the week ahead remains to be seen. FHA mortgage loan fixed interest rates remain in | more...