Articles Tagged With: FHA Loan Requirements

FHA Loans And Natural Disasters: What You Should Know

October 24, 2016

Mold Standards: An FHA Loan Question

A reader asks, “Does the EPA or the FHA have the responsibility for setting the TLVs for mold spores in the air? What if the mold count is higher outside than inside?” The FHA does not set or regulate such health issues, deferring instead to federal, state, or local authority where applicable. According to the Environmental Protection Agency’s official site, we learn the following about mold as it relates to exposure in buildings (in general): “Is sampling for mold needed? In most cases, if visible mold growth is present, sampling is unnecessary. Since no EPA or other federal limits have been set for mold or mold spores, sampling cannot be used to check a building’s compliance with federal mold standards. Surface sampling may be useful to determine if an area | more...

October 18, 2016

Appraisals: FHA Loans and MPR Rules

By Joe Wallace

We get many questions about FHA appraisals, and there are some critical issues to keep in mind when considering this mandatory part of the FHA loan process. A home to be purchased with an FHA mortgage loan must pass an FHA appraisal, which is intended strictly to assess the fair market value of the home and insure the property meets FHA minimum standards. Note the use of the use of the word, “minimum”. Appraisals are NOT intended as INSPECTIONS of the property. A home that passes an FHA appraisal is not guaranteed to be free of problems, and the FHA makes it clear that borrowers should not accept the appraisal as any sort of stamp of FHA approval. In all cases, a borrower purchasing a home with an FHA mortgage | more...

How much can I borrow with an FHA refinance loan?

October 13, 2016

FHA Refinance Loans: What Are Your Options?

By Joe Wallace

FHA loans aren’t just for new purchases. You can also apply for an FHA refinance loan for an existing FHA mortgage, a conventional loan, or other types of mortgages depending on the type of refinancing you need. HUD 4000.1 describes the rules for FHA refinance loans, including a basic list of all the types of refinancing available and what they are meant to do for the borrower: -No cash-out refinances of FHA-insured and non FHA-insured Mortgages are designed to pay existing liens. These include: Rate and Term refinance, Simple Refinance, and Streamline Refinance. -Cash-out refinances are designed to pull equity out of the Property. -Refinances of non FHA-insured Mortgages are available for qualified Borrowers in negative equity positions (Short Refi). -Refinances for rehabilitation or repair (Section 203(k)). That information is | more...

FHA One-Time Close Construction Loans In 2019

October 13, 2016

Second Appraisal Rules For FHA Mortgages

By Joe Wallace

There are some circumstances where a borrower may wonder about requesting a second appraisal on a property to be purchased with an FHA mortgage. For example, if the loan applicant decides to switch lenders, is a new appraisal required? What about cases where there’s a disagreement over the results of the appraisal? Many of the answers to these questions are circumstantial-it all depends on the nature of the request. Sometimes a second appraisal may be permitted IF conditions described in HUD 4000.1 exist. But in other cases a second appraisal is simply not permitted. One good example of that-a borrower or seller cannot request a second appraisal to increase the fair market value of the property. However, if “material deficiencies” are suspected in the original appraisal, the market value of | more...

September 23, 2016

Well Water: FHA Loan Questions

By Joe Wallace

A reader asks, “FHA use to only require that these top items need to pass. Lead (first draw), Nitrate, Nitrite, Total Nitrate/Nitrite,Total Coliforms, Fecal Coliforms or E. Coli. Is this still true? I am hearing that a full water panel is required to be done, is this now true and if so,is FHA major focus still on the top items passing? Also what is required by FHA if one of these items fails?” This question is in reference to FHA requirements for properties that are served by wells. In general, the local health authority would set the standards, so the reader would need to consult with the local authority to get the answer to the first part of this question. Health standards, procedures, and requirements can and do vary from | more...

September 14, 2016

FHA 203(k) Rehab Loan Options

By Joe Wallace

The FHA has a program that allows borrowers to apply for a mortgage loan in order to improve a property. The FHA 203(k) rehab loan is intended for borrowers who want to buy or refinance property and repair them, but not all borrowers have big rehab projects or work that requires a huge sum of money. What are the FHA 203(k) options for borrowers? There are two different types of 203(k) loans-the typical version is available, but there is also a “limited” 203(k) for projects that require a smaller amount of funds. The FHA official site describes the limited 203(k) as follows: “FHA’s Limited 203(k) program permits homebuyers and homeowners to finance up to $35,000 into their mortgage to repair, improve, or upgrade their home. Homebuyers and homeowners can quickly | more...

September 2, 2016

Foreclosure Avoidance on FHA Mortgages: The Trial Payment Plan

By Joe Wallace

The FHA recently announced changes to its policies designed to help those who purchased homes with FHA mortgages and have since fallen into financial trouble to avoid foreclosure. There are many government programs to help borrowers keep their homes in hard times including the Obama mortgage, and the FHA Home Affordable Modification Program or HAMP. If you have fallen behind on your mortgage payments on an FHA mortgage, the information here will be of special interest to you. Those who are under consideration for HAMP may learn they have to complete a trial payment plan before the HAMP modification can be finalized and approved. But what does this trial payment plan (also referred to as TPP) entail? The FHA announced modifications to the HAMP program this summer, and in FHA | more...

August 30, 2016

FHA Announces Changes To Help Delinquent Borrowers Avoid Foreclosure

By Joe Wallace

The FHA has issued a press release announcing changes to its loss mitigation program guidelines to help borrowers avoid foreclosure and remain in their homes in times of financial difficulty. According to HUDNo.16-127, “The Federal Housing Administration (FHA) today announced new procedures to strengthen the process mortgage servicers use to help struggling families avoid foreclosure and remain in their homes. FHA is streamlining its loss mitigation protocols that servicers must use when evaluating and deploying home retention options, foreclosure alternatives that allow delinquent borrowers to retain their home.” By way of background, the FHA official site (in Mortgagee Letter 2016-14) explains, “The evolution of FHAs loss mitigation guidance has also led to improved consumer engagement, the streamlining of FHAs Pre-Foreclosure Sale option, and a new loan modification by which Mortgagees | more...

August 17, 2016

FHA Loan Questions: Income Rules

By Joe Wallace

A reader got in touch with us to ask a question about FHA standards for income. “I am on contract and my lender just told me that I might not be qualify for FHA because of my income. Is that one of the requirements for FHA?” FHA loans require the borrower to financially qualify for the loan, which includes the lender making a determination about the borrower’s employment situation. While this reader question is far too general to answer with regards to the reader’s specific circumstances, we can observe the following about FHA home loans based on a reading of HUD 4000.1: The lender is required to verify a borrower’s income to insure it is stable, reliable, and likely to continue. Income that is deemed “verifiable” is allowed to be | more...

August 15, 2016

FHA Amends Rehab Loan Consultant Fee Policy

By Joe Wallace

The FHA has amended policies for the FHA 203(k) Rehabilitation Mortgage Insurance Program where the 203(k) Consultant Draw Inspection Fee is concerned. According to the FHA official site, the rule change is designed to revise the maximum fee that may be charged by a 203(k) consultant for the “Draw Inspection” Mortgagee letter 2016-12 states that the FHA and HUD continue to “analyze the overall Consultant Fee structure” established in 1995 for FHA rehab loans. In doing so, the FHA and HUD have “determined that the current $100 limit on the Draw Inspection Fee discourages consultant participation in the Section 203(k) program and has the potential to limit access to credit.” Consequently, the FHA has revised this fee limit. “The Consultant Draw Inspection Fee is amended to permit a fee that | more...