October 15, 2015
With the publication of HUD 4000.1, existing FHA loan rules have been restated, updated, modified, or reprinted. In some cases nothing has changed, in other cases there have been major or minor alterations to the language, terms or conditions of these FHA loan rules. We’re examining many sections of the new rulebook and discussing common issues that may be affected by those changes, even if in some cases the rules haven’t changed.
Knowing what’s in HUD 4000.1 as opposed to the old FHA single family home loan rules found in HUD 4155.1 and 4155.2 is important as HUD 4000.1 is THE definitive source for the program now.
One big question some borrowers have about FHA loans is what happens if an early payoff is chosen. Can the lender penalize or charge the borrower for an early payoff of the FHA “forward” mortgage?
No–you can’t be charged or financially penalized for early payoff of a new home loan or a refinance loan guaranteed by the FHA. You also cannot be charged fees associated with the early payoff of the loan such as having the lender calculate the payoff amount.
A list of prohibited fees and charges found in HUD 4000.1 Part A Section III includes prohibited fees for certain things associated with early payoff:
“The Mortgagee must not charge the Borrower for the following services:
–costs of telephone calls, telegrams, personal visits with the Borrower, certified mail, or other activities that are normally considered a part of a prudent Mortgagees servicing activity;
–Mortgagees use of an independent contractor such as a tax service to furnish tax data and information necessary to pay property taxes or make the payments on behalf of the Mortgagee;
–preparing and providing evidence of Payoff, Reconveyance, or termination of the Mortgage;
–providing information essential to the Payoff;
–recording the Payoff of the Mortgage in states where recordation is the responsibility of the Mortgagee; or
–fees for services performed by attorneys or trustees who are salaried members of the Mortgagees staff.”
The evidence of payoff and the recording of the payoff, are important services for the borrower and it’s good to know you cannot be charged for them. We’ll explore other issues in this area in future blog posts.
Do you work in residential real estate? You should know about the free tool offered by FHA.com. It’s designed especially for real estate websites–a widget that displays FHA loan limits for the counties serviced by those websites.
It is easy to spend a few seconds customizing the state, counties, and widget size for the tool; you can copy the code and paste it into your website with ease. Get yours today:
http://www.fha.com/fha_loan_limits_widget
Joe Wallace has been specializing in military and personal finance topics since 1995. His work has appeared on Air Force Television News, The Pentagon Channel, ABC and a variety of print and online publications. He is a 13-year Air Force veteran and a member of the Air Force Public Affairs Alumni Association. He was Managing editor for www.valoans.com for (8) years and is currently the Associate Editor for FHANewsblog.com.
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