Articles Tagged With: FHA Energy Efficient Mortgage

October 29, 2013

FHA Loans and Trust Income

FHA home loan applications require the borrower to list income and job details so that the lender can accurately determine a borrower’s debt-to-income ratio. For this purpose, FHA loan rules say that only income that is likely to continue can be used–the borrower’s wages, tips, bonuses and other earnings may be counted if they meet FHA criteria for “stable and reliable” and “likely to continue”. One source of income for some borrowers involves a trust fund–can trust income be used as verifiable income for an FHA mortgage loan? The answer is yes, but only if the trust income meets FHA loan minimum standards as described in HUD 4155.1, which includes the following guidance to lenders when reviewing trust fund income listed on a borrower’s application, found in a section called | more...

October 28, 2013

FHA Back to Work Program Counseling–Where To Find It

By Joe Wallace

Ever since we posted about the FHA’s Back to Work program for borrowers who have experienced “Economic Events” or financial hardship and lowered credit ratings as a result of the recession, we’ve gotten a number of important questions about the program. According to one of our original posts on the new FHA program, “Back To Work, according to FHA Mortgagee Letter 2013-26, lets lenders evaluate these Economic Events to see if the borrower may still be a good credit risk for an FHA loan. “FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage. To that end, FHA is allowing for the consideration of borrowers who have experienced an Economic Event and can | more...

October 22, 2013

FHA Loans After Bankruptcy: A Reader Question

By Joe Wallace

A reader asks, “What is the length of time after filing bankruptcy that you have to wait to qualify for a FHA loan…during that waiting process, what are some of the things that I should be doing to make the approval process easier and making my credit better?” FHA loan rules and lender standards are both considerations in situations like these, as is the specific circumstances of the individual’s bankruptcy and other credit issues. Borrowers should know that FHA minimums are just that–minimums. Lenders can and often do require higher standards. That’s why it’s important to consider shopping around for a lender who may be more willing to work with you–one lender may not be able to help, while another can, depending on your situation. For the record, FHA loan | more...

October 17, 2013

FHA Loans and the Government Shutdown: A Reader Question

By Joe Wallace

*UPDATE** The government shutdown has ended for now as of Wednesday night October 16 2013, but the advice in this post is sound, regardless. There could easily be another government shutdown if conditions repeat themselves in the next round of negotiations over the Federal budget when the current plan expires next year. If there is another government shutdown, the advice in this post will be good to know for affected FHA borrowers. A reader asks, “I am a seller of a home that was suppose to close Oct 1. We still have not closed as of Oct 12. My buyer’s financial company is saying it is due to the government shutdown. Everything I read says it should not be held up. How does my buyer find out what is going | more...

October 16, 2013

FHA Loan Rules For Non-Purchasing Spouses

By Joe Wallace

One common FHA loan question has to do with the status of a non-purchasing spouse. Can a married borrower apply for an FHA loan with a non-purchasing spouse? In such cases would the income or credit history of the non-purchasing spouse be considered as part of the loan application? The answer depends greatly on the state laws where you live, or the state laws in the area where the home is to be purchased. According to the FHA loan rules found in HUD 41551., Chapter Four: “If required by state law in order to perfect a valid and enforceable first lien, a non-purchasing spouse may be required to sign either the security instrument or documentation indicating that he/she is relinquishing all rights to the property. When the security instrument is | more...

October 8, 2013

Minimum Down Payments for FHA Loans: A Reader Question

By Joe Wallace

A reader asks, “Chapter 7 bankruptcy discharged in Oct 2010. Credit score now around 670. The hardest thing I am finding is the ability to save for a down payment. What would be a minimum down payment that I would be required to have before I could get an FHA loan? Thanks.” Unlike VA mortgage loans, FHA home loans feature a minimum down payment, also known as a minimum cash investment. The down payment must not only be a certain percentage of the loan amount, but it is also required to come from approved sources that can be verified. Borrowers cannot, for example, take out a cash advance on a credit card or any other form of unsecured loan for the down payment. FHA loan rules describe the minimum down | more...

October 3, 2013

FHA Commissioner Addresses Confusion Over FHA Loans During Government Shutdown

By Joe Wallace

FHA Commissioner Carol Galante issued a statement clarifying some confusion over the FHA’s ability to process new single-family FHA home loan applications during the government shutdown. According to a variety of sources including CNN.com and American Banker, earlier reports from the FHA mistakenly announced the agency would not issue new loans if the government shut down. Galante issued a statement to clear up the issue, saying, “The HUD Contingency plan posted on Friday mistakenly included incorrect information about a potential shutdown’s impact on the FHA single-family loan program,” HUD said in a statement. “FHA will be able to endorse single family loans during the shutdown. A limited number of FHA staff will be available to underwrite and approve new loans.” The original shutdown plan had mistakenly announced, “FHA will be | more...

October 2, 2013

Bad Credit FHA Loans? A Reader Question

By Joe Wallace

We get a lot of questions about FHA loans and bad credit. One of the latest examples comes from a reader who asks; “I am wanting to buy me a single family home but my credit is messed up. I know my score is bad! I am a single mother with 4 kids and I want my own house. I am in need of help on which way to go. Do I need to file chapter 13 or 7 or is there a way to get my credit fixed so that I can make another one of my dreams come true? Help me please.” While we cannot advise or answer questions on issues that fall outside how FHA loans work and their related issues (appraisals, Private Mortgage Insurance, etc.) | more...

September 27, 2013

FHA Loans, Credit Scores, and Your Repayment History

By Joe Wallace

One common type of question we’ve been asked as of late has to do with a borrower’s chances at getting an FHA loan approved in spite of bad credit, past financial difficulty, or a combination of both. There are many important things to understand about credit, but one of the most important for any borrower interested in an FHA should know about? The FHA’s attitude towards on-time bill payment, past financial difficulty, and related issues. The FHA loan rulebook, HUD 4155.1 says in Chapter Four, Section C, “Past credit performance is the most useful guide to • determining a borrower’s attitude toward credit obligations, and • predicting a borrower’s future actions.” That’s a basic general guideline, as is the next line from Chapter Four. “Borrowers who have made payments on | more...

September 25, 2013

FHA Loan Modification Rule Changes

By Joe Wallace

Borrowers who get into financial difficulty and have trouble making payments on their FHA home loans have some options with the FHA that can help the borrower avoid foreclosure. The FHA has updated its rules to home loan modifications and other foreclosure avoidance procedures–those updates are found in FHA Mortgagee Letter 13-32. We recently discussed some of the initial changes, which the FHA has given lenders until December 2013 to make. That recent update includes some instructions to the lender regarding loan forbearance. “Before a mortgagee considers a delinquent mortgagor for one of FHA’s Loss Mitigation Home Retention Options, the mortgagee must first evaluate the mortgagor for both Informal and Formal Forbearance Plans…Informal and Formal Forbearance Plans are the only options available for delinquent mortgagors without verifiable losses of income | more...