Articles Tagged With: FHA Loan Requirements

August 30, 2016

FHA Announces Changes To Help Delinquent Borrowers Avoid Foreclosure

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...

August 12, 2016

FHA Loans and Social Security Income

By Joe Wallace

A reader asks, “I don’t understand if I have a 1099 and I have a benefits letter, and the letter that states at the end of the year what I am getting for the following year, why I am being asked or can be asked for something that states I will get social security for 3 years? There is nothing that says social security will give this to me or a name for it.” FHA loan rules governing Social Security income are found in HUD 4000.1, page 195 under “Other Sources Of Effective Income”. The rules require the lender to make a distinction between “effective income” which would continue for at least three years of the new loan, and “compensating factors” in the case where the lender cannot establish that | more...

July 26, 2016

FHA Loan Questions: Unpaid Tax Liens

By Joe Wallace

A reader asks, “I entered into an electronic direct withdrawal from my checking account repayment plan with IRS for tax underpayment…after meeting with IRS, payment agreement request was approved. After the agreement was approved IRS filed a lien on the owed amount. I am not currently not a property owner, but I would like to buy a home in the next year.” “However the tax lien caused my credit score to drop to 649. I currently earn $92,000.00 from retirement income, and $40,000.00 from employment income. debt ration is where it should be. My question is can I ever qualify for FHA home loan, if the lien is not paid? Or (does) the lien (have) to be paid in full, along with a paid document submitted to all credit bureaus?” | more...

July 25, 2016

FHA Loan Questions: Credit Scores and Down Payments

By Joe Wallace

We get many questions about FHA loan standards for FICO scores and similar issues. Here’s one of the latest: “I am looking to purchase a mobile home for 25000. I have a 610 credit score and a stable job (been there for 8 years). I want to put down 40% of the loan. Do you think I would have any major issues even with a low credit score?” Questions like these are a good reminded that plenty of misconceptions about the home loan process exist. Unfortunately one of the prevailing misconceptions is that FICO scores are THE determining factor in home loan approval. That is not to dismiss the importance of FICO scores. Lender standards require a borrower to have a minimum FICO score (often between 620 and 640 depending | more...

July 21, 2016

More About FHA Loans For Home With PACE Assessments

By Joe Wallace

Recently we wrote a blog post about FHA plans to allow qualifying homes with PACE assessments to be purchased with FHA mortgages. The FHA announced this recently in order to help promote energy efficiency (PACE stands for Property Assessed Clean Energy and may be assessed in a manner similar to property taxes.) The FHA issued a mortgagee letter explaining how and why a property with a PACE assessment may be eligible for an FHA mortgage. Past issues with PACE include being considered a “first lien” on the property. FHA loan rules explain how new guidelines can permit a home with PACE to be purchased with an FHA mortgage: “Properties which will remain encumbered with a PACE obligation may be eligible for FHA-insured mortgage financing, provided that the mortgagee determines that | more...

July 15, 2016

Mortgage Rate Trends: Rising

By Joe Wallace

Mortgage loan rates have been on the rise most of the week; three out of four business days were marked by higher numbers or closing costs and with Brexit, overseas terrorism headlines, and domestic scheduled economic data releases, it’s possible we’re going to see rates creeping up over the short term next week much the way we did this week. At the time of this writing, 30-year fixed rate conventional mortgages are, best execution, reported at or near 3.375%, up this week from the previous week’s range bottoming out at 3.25%. FHA mortgage loan rates are currently holding in their 3.25% comfort zone. How long can they persist at or near these levels? Next week will be interesting to watch. (As always, best execution rates listed here assume ideal conditions; | more...

July 14, 2016

FHA Loans and Bankruptcy

By Joe Wallace

A Few Words About Bankruptcy from FHA.com on Vimeo. Some borrowers want to know how credit issues such as foreclosure, Chapter 7 bankruptcy, and Chapter 13 bankruptcy can affect their ability to get an FHA mortgage loan or refinance loan. While those who have been through such proceedings may have a better understanding of what happens to your credit, many who are facing the option of filing bankruptcy, going into loan default and foreclosure, or even doing a deed-in-lieu of foreclosure may not understand what’s at stake. The video above explains some basics about bankruptcy. But how does bankruptcy in particular affect your ability to get an FHA loan? Like foreclosure and deed-in-lieu, filing bankruptcy usually requires a mandatory “seasoning period” or waiting time between the bankruptcy and the new | more...

July 14, 2016

FHA Loan Questions: Refinancing After Foreclosure

By Joe Wallace

A reader asked us recently, “Is it true that I have to wait to refinance my FHA mortgage after having had a foreclosure on another property I own?” FHA loan rules regarding new loans in the wake of a foreclosure are found in HUD 4000.1, page 247 which states: “A Borrower is generally not eligible for a new FHA-insured Mortgage if the Borrower had a foreclosure or a DIL of foreclosure in the three-year period prior to the date of case number assignment. This three-year period begins on the date of the DIL or the date that the Borrower transferred ownership of the Property to the foreclosing Entity/designee.” FHA loan rules do provide certain exceptions. “The Mortgagee may grant an exception to the three-year requirement if the foreclosure was the | more...