Articles Tagged With: RESPA

May 18, 2012

HUD Studies Reveal Important Benefits Associated With Housing Counseling

A press release from the Department of Housing and Urban Development says FHA/HUD approved housing counseling offers significant benefits “for families who purchase their first homes and those struggling to prevent foreclosure”. Those benefits were the focus of two HUD research projects. According to HUDNo.12-085, ” HUD found housing counseling significantly improved the likelihood homeowners remained in their homes” . That finding comes from two housing counseling research projects, one that involved pre-purchase counseling and one focusing on foreclosure avoidance counseling by HUD-approved agencies. “Both the pre-purchase counseling and foreclosure counseling studies enrolled clients in the fall of 2009 and early 2010. HUD found that 35 percent of participants became homeowners within 18 months of pre-purchase counseling and only one of those buyers subsequently fell behind in their mortgage payments.” | more...

May 15, 2012

FHA Loans: Rights and Responsibilities

By Joe Wallace

According to the FHA and HUD, FHA loans come with certain rights and responsibilities. Some borrowers don’t realize they have these rights or know what the lender’s obligation to the borrower might be under FHA/HUD rules and the Real Estate Settlement Procedures Act (RESPA). Knowing makes for an informed borrower–someone empowered to take action in cases where the borrower feels something isn’t quite right. How well do you understand the following? The Lender’s Duty To Respond To Complaints According to the FHA official site, any borrower with problems with the servicing of a home loan is entitled to a response from the lender. In cases where you aren’t getting that response, the FHA urges you to “Write to your servicer and call it a ‘qualified written request under Section 6 | more...

December 12, 2011

FHA Loan Forbearance Rules For Unemployed Borrowers

By Joe Wallace

In July 2011, the Obama administration announced changes to the FHA loan program which requires lenders to extend FHA loan forbearance to unemployed borrowers. This change affects those who already have FHA mortgages rather than those applying for them; the new rules “require servicers to extend the forbearance period for unemployed homeowners to 12 months. The Administration also intends to require servicers participating in the Making Home Affordable Program (MHA) to extend the minimum forbearance period to 12 months wherever possible under regulator and investor guidelines.” According to the FHA press release announcing these changes, “These adjustments will provide much needed assistance for unemployed homeowners trying to stay in their homes while seeking re-employment. These changes are intended to set a standard for the mortgage industry to provide more robust | more...

November 22, 2011

FHA Loans, Escrow Accounts, and the Real Estate Settlement Procedures Act

By Joe Wallace

If you’re new to the home buying process, chances are good you’re learning plenty of new things about banking, the loan process, and escrow accounts. An escrow account is often required by lenders as part of an FHA home loan in order to pay property taxes, home insurance and other required expenses. But what are the rules governing escrow and what should the borrower know? To begin, the Real Estate Settlement Procedures Act or RESPA states that escrow is NOT mandatory as a condition of applying for an FHA home loan. That said, the lender is free to require an escrow account–but the FHA does not insist upon one. When a lender does require money to be held in escrow, the financial institution is limited by RESPA–there’s a maximum calculation | more...

November 3, 2011

FHA Loans and Foreclosure Avoidance: Some Basics

By Joe Wallace

There have been several reader questions lately about the foreclosure process on FHA home loans. What options do FHA borrowers have when facing the risk of default and/or foreclosure on their FHA mortgages? A quick look at the FHA official site’s page on the subject of foreclosure avoidance at http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure reveals several options. One program known as HAMP is the Home Affordable Modification Program, which “lowers your monthly mortgage payment to 31 percent of your verified monthly gross (pre-tax) income to make your payments more affordable.” According to the FHA, a typical FHA loan modification under HAMP “results in a 40 percent drop in a monthly mortgage payment. Eighteen percent of HAMP homeowners reduce their payments by $1,000 or more.” Another program borrowers may consider is the Principal Reduction Alternative, | more...

November 1, 2011

FHA Loans and RESPA

By Joe Wallace

FHA loans, like other mortgage transactions, are governed by a set of regulations including the Real Estate Settlement Procedures Act or RESPA. According to the official site at FHA.gov, “The Real Estate Settlement Procedures Act (RESPA) insures that consumers throughout the nation are provided with more helpful information about the cost of the mortgage settlement and protected from unnecessarily high settlement charges caused by certain abusive practices.” Borrowers who suspect those abusive practices have been used in their FHA home loan transactions (and/or conventional loans) are urged to report such problems. But where does the borrower start? What areas of the FHA loan transaction are governed by RESPA? According to the FHA, “RESPA is about closing costs and settlement procedures. RESPA requires that consumers receive disclosures at various times in | more...

August 12, 2011

FHA Loans and Your Rights as a Borrower

By Joe Wallace

Predatory lending and real estate scams are common no matter what the economy is doing; when markets are unpredictable and the economic picture isn’t as optimistic as usual, scam artists tend to come out of the woodwork. How can house hunters protect themselves from scams and schemes? Sometimes the first step is knowing some of the basics. When it comes to applying for an FHA home loan, borrowers have rights which should be understood long before the search for a new home begins. Knowing your rights is a way to protect yourself from a range of things from simple high-pressure tactics that aren’t in your best interest, to outright fraud. The FHA official site emphatically states, “ATTENTION BORROWER! This may be the largest and most important loan you get during | more...

July 12, 2011

Fidelity National Financial to Pay 4.5 Million in RESPA Kickback Settlement

By Joe Wallace

FHA borrowers come to the bargaining table with a set of consumer protections on their side in the form of the Real Estate Settlement Procedures Act, or RESPA for short. One of those protections is a policy that lenders may not get any financial compensation for referring business to third parties such as home warranties, insurance, etc. This rule prevents a conflict of interest in the real estate industry; RESPA laws are designed to keep buyers from being steered towards goods and services based on hidden relationships between lenders and third parties. HUD recently issued a press release announcing a settlement involving Fidelity National Financial, which was found to have engaged in illegal kickbacks and referral payments. The press release says Fidelity National Financial, “engaged in a widespread and years-long | more...

June 1, 2011

FHA Loans and Escrow Accounts

By Joe Wallace

The Real Estate Settlement Procedures Act provides powerful consumer protections when it comes to home loans. It establishes limits, requires lenders to be transparent when it comes to fees and expenses, and requires the borrower to be fully informed as to the costs of a home loan. FHA borrowers and conventional loan applicants alike are protected under RESPA. There are many protections, rules and requirements under RESPA, but one particular part of the act applies to escrow accounts for real estate loans. According to the FHA official site, “Section 10 of the Real Estate Settlement Procedures Act (RESPA) limits the amount of money a lender may require the borrower to hold in an escrow account for payment of taxes, insurance, etc. RESPA also requires the lender to provide initial and | more...

February 16, 2011

The FHA and Fair Lending Laws

By Bruce Reichstein

The FHA official site has much to say about fair lending laws. Over the years the FHA loan program has seen its share of regulatory changes designed to give fair and equal access to all qualified borrowers regardless of race, color, national origin, religion, sex, family status or disability.