October 16, 2019
October 14, 2019
Today we pause from our posts about FHA home loans, FHA refinance loans, and related topics, to enjoy the three day weekend some observe as Indigenous Peoples’ Day, traditionally observed in the United States as Columbus Day. We’ll return to our usual posting schedule tomorrow (Tuesday October 14, 2019) but in the meantime, if you too are celebrating a three-day weekend, have a safe and pleasant one and thank you for reading!
October 4, 2019
FHA Single-Family home loans are designed for those who want to be owner-occupiers. Those looking for affordable housing often turn to FHA mortgages to buy condos, mobile homes, town houses, and typical suburban houses. But there is also the potential to purchase mixed-use properties with an FHA mortgage as long as those homes meet FHA standards, lender requirements, local zoning, and local building code requirements. What are the rules for buying a mixed-use property? To start, the nature of the real estate must be primarily residential in nature. The non-residential use of the home cannot detract from its’ use or status as a dwelling. The FHA Single Family home loan handbook, HUD 4000.1, starts in this area by formally defining what it considered to be a mixed-use property and the | more...
September 9, 2019
The FHA and HUD announced changes to FHA condo loan approval policy in August of 2019, opening the program up to condo loans in condominium projects that have not been added to the FHA approved list. A Final Rule detailing the program changes was published, but in the interim between revising the FHA Single-Family Home Loan program handbook, HUD 4000.1, the FHA and HUD have published rules to manage the new rules. According to an FHA mortgagee letter published on the FHA official site, “FHA systems will be enhanced in the future to permit the issuance of case numbers in unapproved projects” basically from the time the final rule became effective (mid-August 2019) until the FHA and HUD rules and systems are fully updated with the new changes. What is | more...
September 6, 2019
The Department of Housing and Urban Development has issued recommendations to the President for housing reform, including attention on down payment assistance programs and cash-out refinancing. According to a press release issued on the HUD official site, this is NOT the same housing finance reform plan, which was developed by the U.S. Treasury Department. There are major differences between the two in some respects including the HUD language discussing the need to focus on “the core mission” of the FHA where home loans are concerned. It’s the view of the Treasury Department (as stated in the plan) that any changes to the core of what has traditionally been considered an FHA loan program could be detrimental. The Treasury Department plan states, “…any proposal to fundamentally change the housing finance system | more...
September 4, 2019
The Department of Housing and Urban Development is reminding homeowners of the disaster resources available from federal agencies including HUD, the FHA, FEMA, and more. Those in federally declared disaster areas are eligible for special FHA home loan forbearance and other foreclosure avoidance measures. But loan forbearance and foreclosure avoidance are NOT automatic. All home owners still paying their mortgages at the time of the disaster should contact their lenders to discuss next steps and how to make arrangements to avoid home loan default and foreclosure. Lenders cannot help borrowers who do not do so, and it pays to be proactive, especially where FHA mortgages are concerned. FHA Foreclosure and Loss Mitigation Policy FHA lenders are given freedom to use “reasonable judgment in determining who is an ‘affected borrower’ in | more...
August 30, 2019
The FHA and HUD have announced expanded disaster relief measures for those in federally declared major disaster areas. The changes (see below) must be implemented no later than November 30, 2019 but may be used by lenders right away. The FHA and HUD advise these changes will be reflected in a pending update of the FHA Single-Family Loan Handbook, HUD 4000.1. On Thursday, August 29, 2019, the Federal Housing Administration announced in a press release that the agency is, “expanding its foreclosure prevention options to allow borrowers in Presidentially Declared Major Disaster Areas (PDMDAs) with delinquent FHA-insured mortgages to bring their mortgages current without increasing their interest rates or principal and interest payments.” This is an expansion/enhancement of a temporary measure announced in 2018; Mortgagee Letter 2018-01 “temporarily amended” FHA/HUD | more...
August 16, 2019
The Department of Housing and Urban Development official site announced new FHA condo loan rules in August 2019 that make it easier to purchase a condo unit, especially for condo projects not added to the FHA approved list. October 15, 2019 is the start date for the new rules that allow FHA loan approval for mortgages to buy condo units in projects that are not on the FHA approved list. Not all condo units are eligible for this consideration, and the FHA and HUD have issued a list of “single unit approval” requirements that include the following as described on the HUD official site: The individual condominium unit must be located in a completed project that is not FHA-approved; Condo projects that have 10 or more units are limited to | more...
August 15, 2019
The Federal Housing Administration has announced changes to its’ condo approval policies that could make it easier for house hunters to find and purchase condo units with an FHA mortgage. The changes are intended to increase lender flexibility and to adapt to changing conditions in the housing market. The FHA and HUD issued a press release on the new rules which states that the new rules …“will allow certain individual condominium units to be eligible for FHA mortgage insurance even if the condominium project is not FHA approved.” Under the old rules, a condo project had to be on the FHA approved list or added to it. As of October 15, 2019, the new FHA policies will, according to the FHA official site, include the following changes to FHA condo | more...
August 13, 2019
One thing you will read often about FHA single-family home loans? They are only intended for owner-occupied residences. So why do some borrowers hear of some homeowners being approved for FHA loans for a second house? There is a provision in HUD 4000.1 that allows an FHA mortgage for a “second” primary residence, as well as a provision for what the FHA and HUD term “secondary residences” under certain conditions. The FHA loan rules say secondary residences are defined as follows: “Secondary Residence refers to a dwelling that a Borrower occupies in addition to their Principal Residence, but less than a majority of the calendar year. A Secondary Residence does not include a Vacation Home. “ FHA loan approval may be possible for a secondary residence when the following applies: | more...
August 6, 2019
The Department of Housing and Urban Development has issued a mortgagee letter announcing a major change to the FHA Cash-Out Refinance Loan program. Effective September 1, 2019, the loan-to-value ratio for FHA cash-out loans is reduced from 85% to 80%. All FHA cash-out refi loans with FHA case numbers issued on or after 1 September 2019 will have the lower LTV. This has the effect of reducing the amount of cash back to the borrower on the transaction. The HUD press release states that the reduction is intended to protect against weaknesses in the housing market, and cash-out refinance loan defaults. The FHA has experienced an overall increase in cash-out loans as high as 250 percent according to HUD. In light of that statistic and other data, the FHA concluded | more...