Articles Tagged With: Single Family Handbook 4000.1

April 10, 2015

FHA Loan Rules: Student Loan Debt And Mortgage Applications

A reader asks, “if I have a student loan with a 0 payment and can not get the payment what % will fha use for the student loan payment?” The answer to this question depends greatly on the status of the student loan. Is the student loan in deferment? And if so, for how long? FHA loan rules in HUD 4155.1 Chapter Four Section C state: “Debt payments such as a student loan or balloon note scheduled to begin or come due within 12 months of the mortgage loan closing must be included by the lender as anticipated monthly obligations during the underwriting analysis.” FHA loan rules in Chapter Four also add, “Debt payments do not have to be classified as projected obligations if the borrower provides written evidence that | more...

April 6, 2015

FHA Loan Employment Verification Rules: A Reader Question

By Joe Wallace

A reader asks, “I was trying to get a FHA loan however once all my documentation was sent to the underwriter she denied me, because I am employed by my mother and he VOE was filled out by her. They denied my because they could not use that income. I have my pay stubs & my w-2′s. Where they telling my the truth or just didn’t want to give me the loan because i am only 21. I feel like they didn’t want to give me the loan because i am so young. Everything checked out however they just refused to approve me because my mother filled out the VOE.” Unfortunately there is a great deal of information missing from this reader question that makes it impossible to speculate as | more...

March 18, 2015

FHA Loan Assumptions: A Reader Question

By Joe Wallace

A reader asks, “Myself and my brother bought a house together in 2010, and now my brother and his adult son (nephew) would like to assume the mortgage and remove me of any obligation instead of going through the process/cost of buying/selling. Is this possible with an FHA loan?” A home purchased with an FHA mortgage loan may be assumed by another party under certain conditions. The FHA/HUD official site says the following about FHA loan assumptions: “Assumption of an FHA-insured mortgage is a servicing function where the responsibility of the mortgage is acquired by another person through either Simple or Creditworthiness process. Individuals may assume mortgages originated prior to December 1, 1986, by utilizing the “Simple Assumption” process.” “For those mortgages originated on December 1, 1986 and thereafter, HUD | more...

February 28, 2015

FHA Loans and Co-Signers: A Reader Question

By Joe Wallace

A reader asks, “My husband and I are trying to assume this fha loan. My debt to income ratio is too high. My mother in law will gladly co sign for us.” “My husband will not be on the loan, just me. Is it possible for my mother in law to co sign with just me on the loan? I’ve called (LENDER NAME DELETED) (whom own the loan) I have gotten two different answers. One lady said yes and now the other today is saying no. I’m waiting on (LENDER NAME DELETED) to call back. I thought as long as it was blood, marriage, or law related they could “ Co-signers and non-occupying co-borrowers are permitted on FHA loans. Depending on the circumstances a non-occupying co-borrower or co-signer situation may | more...

February 14, 2015

FHA/HUD Update Housing Counseling Requirements

By Joe Wallace

The FHA and HUD have issued a Mortgagee Letter updating housing counseling requirements for borrowers who may face delinquency on an FHA home loan. According to FHA Mortgagee Letter 2015-4, ‘Revised Notification to Homeowners of Availability of Housing Counseling Services”, there is updated content and, “a model template for the notice of the availability of HUD-approved housing counseling.” “The ‘Notification to Homeowners of Availability of Housing Counseling Services’ provides a description of the potential services and benefits of housing counseling to delinquent borrowers.” According to the mortgagee letter, lenders must provide delinquent borrowers, “with a notice describing the availability of housing counseling offered by HUD-approved housing counseling agencies and by the mortgagee.” According to the FHA official site, lenders are “currently required to prepare such a notice that provides the | more...

January 13, 2015

FHA Loans, Recent Major Credit Purchases, and FICO Scores

By Joe Wallace

A reader asks, “I have a credit score of about 590, have some old stuff on my credit, which has been cleared up but still showing. Im looking for a $100,000 loan and have $8k to put down. I just last week got financed for a newer car, what are the chances I qualify for the FHA program since I am a first time home buyer?” FHA minimum FICO score requirements for maximum financing aren’t necessarily the same as the lender’s minimums–the lender is free to require a FICO score higher than the FHA minimum of 580 for maximum financing on a new purchase FHA mortgage loan. The credit report issue is also something the lender would have to address on a case-by-case basis. Depending on circumstances and the presence | more...

January 13, 2015

FHA Loans And Tax Liens: A Reader Question

By Joe Wallace

A reader asks, “How does FHA view a borrower with an expired tax lien? I was assessed additional taxes as the result of an audit in 1999. In 2005, a Federal tax lien was filed. I recently retained a tax attorney, who has confirmed that the lien was released in 2011 due to expiration/statue of limitations. I would now like to pursue FHA purchase financing. Assuming all other requirements are met, will this expired lien disqualify me?” FHA loan rules do address tax liens–the information can be found in HUD 4155.1. According to Chapter Four: “If, after checking public records, credit information or CAIVRS, a borrower is found to be presently delinquent on any Federal debt or has had a lien (including taxes) placed against his/her property for a debt | more...

November 20, 2014

FHA HECM Loan Rule Changes: Credit Standing and Financial Assessment

By Joe Wallace

In 2014, the FHA changed many of the rules associated with Home Equity Conversion Mortgages or HECM loans. One of those rule changes involves a new requirement that lenders perform a financial assessment of potential HECM borrowers to insure the applicants are not only qualified for the program on a financial basis, but also to insure they are able and willing to abide by HECM loan requirements. According to the FHA Mortgagee Letter, “Revised Changes To The Home Equity Conversion Mortgages Requirement”, there were major reasons for the policy changes. “An increasing number of tax and hazard insurance defaults by mortgagors led FHA to establish in Mortgagee Letter 2013-27 a requirement for a Financial Assessment of a potential mortgagor’s financial capacity and willingness to comply with mortgage provisions.” As a | more...

November 12, 2014

FHA PMI Rules: A Reader Question

By Joe Wallace

A reader asks, “Does the PMI not apply to down payments of 20% and above?” The FHA has changed the rules for PMI–Private Mortgage Insurance–and as a result all FHA home loans known as “forward mortgages” with case numbers assigned on or after June 3 2013 now have different requirements than previously approved FHA mortgages. FHA Mortgagee Letter 2013-04 rescinded a set of FHA PMI rules and enacted new ones in their place. The rescinded rules include the following changes as described in FHA Mortgagee letter 2013-04; “…rescinds the automatic cancellation of the annual MIP collection announced in MLs 2000-38 and 2000-46; ….rescinds ML 2011-35, under which mortgages with terms of 15 years or less and LTVs of less than or equal to 78 percent at time of origination were exempt from the | more...

October 6, 2014

FHA Loans, Projected Income: A Reader Question

By Joe Wallace

A reader got in touch with a question related to our post “FHA Loan Answers: New Job Income” which included the following: “Many FHA loan applicants want to know if taking a new job will affect their chances at FHA loan approval. FHA loan rules are designed to help guide loan officers through the qualification process for a variety of scenarios including those where the borrower may have “projected income” that could be factored into the borrower’s debt-to-income ratio. What do FHA loan rules say about projected income? How is it defined? The answers to these questions and more can be found in HUD 4155.1 Chapter Four, Section E. “Projected income is acceptable for qualifying purposes for a borrower scheduled to start a new job within 60 days of loan closing | more...