Articles by: Bruce Reichstein

September 18, 2019

Will FHA Loans Let Me Rent Out My Home?

Will FHA loan rules allow you to rent out the property you purchase with an FHA mortgage? There are many who wish to buy a home to start working as a landlord, but if you wish to do this with an FHA mortgage, there are certain restrictions you will need to know before you commit. Many home loans have specific requirements; a borrower may be permitted to buy an investment property with certain kinds of home loans (not FHA) but the trade off may be higher interest rates, more restrictive terms and conditions (depending on the lender), and penalties for early payoff of the mortgage. Being a Landlord With An FHA Home Loan With an FHA home loan, you are permitted to be a landlord as long as you occupy | more...

September 16, 2019

What You Should Know About FHA Home Loan Amounts

By Bruce Reichstein

Do you know what affects your FHA home loan amount? There are factors that the borrower controls such as whether to make the minimum required down payment or pay more down up front; there are also factors that are in the lender wheelhouse such as the amount of the origination fee and other closing costs. Not all of these factors automatically result in a different home loan amount. Some may be required to be paid up front in cash, others may permit financing in whole but not in part. Still, other expenses may not be required of all transactions but may apply to yours. You may find that in some housing markets, a charge or expense that is reasonable and customary may not be common in other housing markets. Some | more...

September 11, 2019

FHA Mortgages In Special Flood Hazard Areas

By Bruce Reichstein

The FHA lender’s handbook, HUD 4000.1, has instructions for the lender to make sure properties to be purchased with an FHA mortgage aren’t located in certain zones. The lender is also tasked with insuring that if the home is located within certain flood hazard areas that the appropriate hazard insurance is obtained as a condition of loan approval. One such zone is the Special Flood Hazard Area or SFHA. HUD 4000.1 instructs the lender to insure that a home is located in an SFHA as declared by FEMA. “The Mortgagee must obtain flood zone determination services, independent of any assessment made by the Appraiser to cover the Life of the Loan Flood Certification” where applicable. But in general, there are some areas where an FHA mortgage simply is not possible | more...

September 10, 2019

FHA Refinance Loan Options Millenials Should Know

By Bruce Reichstein

Should millennials explore their refinance options right now? Some finance and mortgage publications seem to think so, and recent headlines indicate that many are taking advantage of recent lower mortgage loan interest rates to explore their refi options. Some note that in recent times, some millennials have overlooked FHA refinance loans; one source indicates that FHA refinance applications dropped some nine percent during July 2019 among millennials; some blame that in part on a communication breakdown between lender and borrower where FHA loan benefits are concerned. What FHA refinance options should you know about before choosing the right kind of loan for you? FHA loans can be used to refinance conventional, VA, USDA, and other non-FHA mortgages. You can refinance an existing FHA mortgage with cash-out refinancing to convert the | more...

HUD Releases Housing Reform Recommendations

September 6, 2019

HUD Announces Housing Reform Recommendations

By Bruce Reichstein

The Department of Housing and Urban Development has issued recommendations to the President for housing reform, including attention on down payment assistance programs and cash-out refinancing. According to a press release issued on the HUD official site, this is NOT the same housing finance reform plan, which was developed by the U.S. Treasury Department. There are major differences between the two in some respects including the HUD language discussing the need to focus on “the core mission” of the FHA where home loans are concerned. It’s the view of the Treasury Department (as stated in the plan) that any changes to the core of what has traditionally been considered an FHA loan program could be detrimental. The Treasury Department plan states, “…any proposal to fundamentally change the housing finance system | more...

September 4, 2019

HUD Disaster Resources

By Bruce Reichstein

The Department of Housing and Urban Development is reminding homeowners of the disaster resources available from federal agencies including HUD, the FHA, FEMA, and more. Those in federally declared disaster areas are eligible for special FHA home loan forbearance and other foreclosure avoidance measures. But loan forbearance and foreclosure avoidance are NOT automatic. All home owners still paying their mortgages at the time of the disaster should contact their lenders to discuss next steps and how to make arrangements to avoid home loan default and foreclosure. Lenders cannot help borrowers who do not do so, and it pays to be proactive, especially where FHA mortgages are concerned. FHA Foreclosure and Loss Mitigation Policy FHA lenders are given freedom to use “reasonable judgment in determining who is an ‘affected borrower’ in | more...

September 3, 2019

HUD Announces Fair Housing Charges Against Colorado Landlords

By Bruce Reichstein

Housing discrimination can affect any stage of the house hunting process. And even when that discrimination occurs with a rental property, it can seriously affect the ability to locate and purchase a home. House hunters who need to rent during their journey to home ownership have it difficult enough with all the paperwork and preparation in the home buying process. They don’t need violations of federal law making the process harder, and sometimes the victims of such discrimination are the only ones who have the power to stop future vioations. The U.S. Department of Housing and Urban Development (HUD) has announced Fair Housing Act charges for owners and manager of a complex in Gunnison, Colorado. David B. Welch, John H.Welch, and Ruth E. Welch are all named as Respondents in | more...

August 30, 2019

HUD Announces Expanded Disaster Relief Options

By Bruce Reichstein

The FHA and HUD have announced expanded disaster relief measures for those in federally declared major disaster areas. The changes (see below) must be implemented no later than November 30, 2019 but may be used by lenders right away. The FHA and HUD advise these changes will be reflected in a pending update of the FHA Single-Family Loan Handbook, HUD 4000.1. On Thursday, August 29, 2019, the Federal Housing Administration announced in a press release that the agency is, “expanding its foreclosure prevention options to allow borrowers in Presidentially Declared Major Disaster Areas (PDMDAs) with delinquent FHA-insured mortgages to bring their mortgages current without increasing their interest rates or principal and interest payments.” This is an expansion/enhancement of a temporary measure announced in 2018; Mortgagee Letter 2018-01 “temporarily amended” FHA/HUD | more...

August 28, 2019

The Confusion Over Closing Costs Versus Down Payment

By Bruce Reichstein

Some borrowers get confused over the differences between closing costs and the required minimum down payment of 3.5% needed for FHA home loans. The confusion often comes over what is considered a down payment versus what is considered to be part of the borrower’s closing costs. The most basic thing to know is that the FHA home loan down payment is a standalone payment. It is NOT reduced by the amount of closing costs you pay such as the lender’s fee, appraisal costs, title fees, inspection fees, etc. But that isn’t all-FHA home loan rules, for example, do not permit your down payment to come from the seller. But FHA loan rules DO permit your seller to contribute a certain amount toward the closing costs of the loan. Note the | more...

August 26, 2019

FHA Loan Appraisals: Different Rules For Different Homes

By Bruce Reichstein

FHA loan appraisals have different standards depending on the type of property you wish to buy. That doesn’t mean that some homes get favorable treatment in the appraisal process than others. What it does mean is that some properties have unique issues. For example, an appraisal for an FHA condo won’t be the same as for a manufactured home. One reason? Manufactured homes do not start off with permanent foundations, and having one is a requirement. A condo unit does not face such problems, so there is a specific appraisal requirement for manufactured housing that such homes be affixed to a permanent foundation that meets FHA and federal standards. A condo unit is already on a foundation, so the requirements there have more to do with the state of the | more...