Articles Tagged With: Single Family Handbook 4000.1

October 2, 2014

FHA Loan Credit Report Requirements

When you apply for a home loan, it helps to know what the lender is looking for from your credit report. When it comes to FHA mortgages, the lender wants to see 12 months of on-time payments on your financial obligations as well as the actual numbers of your credit scores as reported by the three major credit reporting agencies. But what does the FHA require from those credit reports? What does the lender need in order to properly document you as a good credit risk? The FHA loan rules for credit report delivery and content are found in HUD 4155.1 Chapter One Section C. A quick glance at this section reveals that credit reports cannot be delivered to the lender from third-parties including the borrower. The credit reporting agency | more...

What you should know about FHA 203(h) Loans For Disaster Victims

September 30, 2014

FHA Mortgage Insurance: A Reader Question

By Joe Wallace

A reader asks, “Mortgage companies have kept sending letters/emails, saying ‘You no longer pay MIP because FHA MIP policy has been changed since May 2014. You have paid unnecessary MIP payments because since you has refinanced for your home 2012.'” “I refinanced my home mortgage through FHA in Mar.2012 and since then I have paid MIP until principal reach less than 78%. It will be by 2019 according to my mortgage company. Can you clarify ‘Revision of Federal Housing Administration (FHA) policies concerning cancellation of the annual Mortgage Insurance Premium (MIP) and increase to the annual MIP’? Dose cancellation of MIP mean ” home buyers who apply finance through FHA do not need to pay MIP? Should I stay with my current mortgage or refinance?” This reader question refers to | more...

September 26, 2014

FHA Mortgage Insurance Premiums: A Reader Question

By Joe Wallace

A reader asks, “I am purchasing a second home using a FHA loan. Why is it necessary to pay for FHA insurance for the length of the loan it is a 30 year fixed mortgage?” While we can’t speculate what the FHA/HUD motivation for changing the FHA MIP requirement for 30 mortgages, we can reiterate FHA loan policy on the matter, which changed back in January 2013. In a Mortgagee Letter (FHA ML 2013-04) FHA loan policy for mortgage insurance premiums changed to require MIP payments for the duration of a 30-year FHA loan. According to the FHA official site: “For loans with FHA case numbers assigned on or after June 3, 2013, FHA will collect the annual MIP for the maximum duration permitted under statute. See 12 U.S.C. § | more...

July 25, 2014

Missing Payments On FHA Loans Prior To Refinancing

By Joe Wallace

One common question about FHA refinance loans involves skipping payments. The ability to skip a payment prior to getting a refinance loan seems like an attractive option to many borrowers, and for those who have become delinquent on home loans. But does the FHA allow skipping payments? How do FHA loan rules address delinquent accounts that are being refinanced? HUD 4155.1 Chapter Three addresses these issues in general, stating: “The borrower must be current on the loan being refinanced for the month due prior to the month in which he/she closes the refinancing, and for the month in which he/she closes.” To clarify, Chapter Three, Section A of HUD 4155.1 provides the following example for us to review: “If the borrower is closing on April 8, he/she must have made | more...

July 22, 2014

FHA Loans And Escrow Requirements: A Reader Question

By Joe Wallace

A reader asks, “I am trying to cancel my escrow acct. with (my lender) due to them selling my Mortgage loan to an undesirable finance company called (name deleted). I was informed that all FHA loans are required to have an Escrow account. Please inform me of my rights.” FHA loan rules do not require an escrow account in every case, but your lender might. According to the FHA/HUD official site, we find the following on the page titled HUD RESPA FAQs. The Real Estate Settlement Procedures Act, also known as RESPA, governs escrow accounts for home loans. Under RESPA there is no requirement for escrow. From the HUD official site: “Does RESPA require borrowers to maintain an escrow account? NO. It is the lender’s decision whether the borrower must | more...

July 14, 2014

FHA and HUD Update Deed-In-Lieu and Pre-Foreclosure Sale Rules

By Joe Wallace

The FHA and HUD have issued a Mortgagee Letter updating the requirements for Deed-In-Lieu and Pre-Foreclosure sales for borrowers at risk of going into default on FHA home loans. Mortgagee Letter 2014-15, Updated Requirements for Pre-Foreclosure Sales (PFS) and Deeds in Lieu (DIL) of Foreclosure, completely updates and supersedes the previous FHA mortgagee letter in these areas. The new regulations could in some cases be implemented right away if participating lenders choose to do so, but FHA/HUD requirements state these rules will be in effect for all lenders as of October 1, 2014. The new guidelines include alterations or modifications of existing policy including the following as listed in the mortgagee letter: –Requirements for real estate agents and brokers participating in PFS transactions; –An initial listing period requirement for PFS | more...

June 3, 2014

FHA Loans and Minimum Waiting Periods After Foreclosure: A Reader Question

By Joe Wallace

A reader asks, “After a foreclosure how many years you must wait for a new application?” FHA loan rules governing this question can be found in HUD 4155.1, Chapter Four, Section C. That section states in part: “A borrower is generally not eligible for a new FHA-insured mortgage if, during the previous three years • his/her previous principal residence or other real property was foreclosed, or • he/she gave a deed-in-lieu of foreclosure.” FHA loan rules permit an exception to this waiting period, IF the foreclosure can be documented as being, “…the result of documented extenuating circumstances that were beyond the control of the borrower, such as a serious illness or death of a wage earner, and the borrower has re-established good credit since the foreclosure.” A common question about these | more...

May 29, 2014

FHA Loan Fees: A Reader Question

By Joe Wallace

A reader asks, “Are there any fees associated, with a FHA loan? I was contacted after inquiring online about a loan and the representative informed me that it would be a fee of $11.00 for credit reports and a fee of $149.00 which normally would cost $350.00 for the application process and additional fees of about $49.00 until credit score was at least 620..need to know if this is legitimate before I pay these fees.” FHA loans do involve fees. A reading of HUD 4155.1 Chapter Five reveals the following: “Lenders may charge and collect from borrowers those customary and reasonable costs necessary to close the mortgage loan. Borrowers may not pay a tax service fee.” Chapter Five also states, “FHA no longer limits the origination fee to one percent | more...

May 7, 2014

FHA Loan Documentation Standards: What’s Required, What’s Not Permitted

By Joe Wallace

In order to get the FHA loan application approval process moving, the lender may need authorization from the borrower to check credit reports, individual creditors, employers, even current or former landlords. In order to do this, your loan officer may need you to sign paperwork showing the financial institution has the authorization needed to request personal data. There are strict rules that govern this process. They are found in HUD 4155.1 Chapter One, Section B, which starts off by stating: “The lender may ask the borrower to sign a general authorization form that gives the lender blanket authority to verify information needed to process the mortgage loan application, such as • past and present employment records • bank accounts, and • stock holdings. If using a blanket authorization form, the | more...

April 25, 2014

FHA Loan Rules For Adding Repairs To The Sales Price Of The Home

By Joe Wallace

When it comes to FHA appraisals, some borrowers and sellers have a common question. Can the cost of a repair or improvement be added to the sales price of the home? If an FHA appraiser requires the upgrade, repair or improvement, does this expense have to be negotiated separately instead? FHA loan rules covering this question are found in HUD 4155.1 Chapter Two Section A, which explains: “Repairs and improvements may be added to the sales price before calculating the mortgage amount when the repairs and improvements are required by the appraiser as essential for property eligibility, and paid by the borrower”. But there’s more. These repairs must be included in the sales contract or an addition to the contract stating that the borrower is responsible for the payment of | more...