FHA Mortgages Info

Income Documentation Changes For FHA Loans & VA Lending (2011-2012)

The guidelines for FHA mortgages and VA loans are pretty much the same and have remained so for as long as I can remember. I have been in the business since 1992 and changes to these kinds of loans are slow to be made and slow to be implemented. The major difference to VA and FHA financing is in the area of paper work.

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2012 Mortgage Is Possible For Economic Crisis Survivors

The current state of the economy has given most average hard working Americans enough anxiety to last a life time. It is quite easy to get caught up in all the doom and gloom to become apathetic regarding the future. But getting a mortgage home loan at 2012 is still possible.

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How To Get Disaster Relief for FHA Homeowners

Disaster Relief for FHA Homeowners

How to get home disaster relief assistance for FHA homeowners, this is the current issue for millions of people who have been in disaster struck areas. In the last few years it seems that mother earth is raging. First came Hurricane Katrina then there where terrible snow storms, fires, floods and now Tornadoes twister storms hitting Alabama, North Carolina, Oklahoma, Virginia, Arkansas, Mississippi, Massachusetts and Georgia.

Million of home and houses have suffered some kind of damage, other homes have been completely wiped out leaving millions of American as refugees in their own state. For these nature disasters the government has the FEMA  (Federal Emergency Management Agency) as part of the U.S. Department of Homeland Security.

Another option for relief can be the SBA  (Small Business Administraion) which help out for homeowners and rentals (no need to be a business owner) with low rates disaster loans for housing and personal needs.

FEMA and HUD For Homeowners Disaster Relief

FEMA by its nature is a federal assistance and is supporting four types of eligible applicants for (PA) public assistance:

1. State Government Agencies
2. Local Governments and Special Districts – county, city, village, town, district.
3. Private Non-Profit Organizations – Colleges, schools and universities, hospital, outpatient facility, homes for the elderly, Museums, zoos, community centers, libraries, homeless shelters.
4. Federally recognized Native American Tribes - Indian or Alaskan.

As you can see, private homeowners have no direct assistance from these FEMA public assistance grants and disaster relief assistance. Into this exact needs the HUD (U.S. Department of Housing and Urban Development) fits in and offers assistance for disaster recovery and relief aid for FHA homeowners.

Who Is Eligible For Disaster Relief

The first requirement for a homeowners disaster relief is that the disaster will be declared by the president as a “disaster”. Until such presidential disaster declaration, and no matter how hard the disaster is, the FHA, HUD and FEMA have no legal authorization for accepting applications and processing the relief assistance.

The first advice by HUD to contact your lender and let them know you are in trouble. The disaster relief does not have to be because your house was crushed by a tornado, it is enough that the place where you work at was damaged or closed for you to be in financial stress and be late on your mortgage payments.

Who Is Eligible For Homeowner Relief

By the HUD guidelines, there are four main guidelines to check whether the disaster loans assistance is relevant for you. There are four questions to answer, which will help you know if you are a candidate for relief aid. If you are, then your lender will be able to cancel or deley any forclosure risks for 90 days.

HUD Disaster Relief Question #1 -  Did your income decrease or did your family expenses rise. As the FHA home loan is given according to ‘loan to income ratio’, (back-end ratio) and change in those may mean that the insured loan is at risk.

HUD Disaster Relief Question #2 – Did the rise in expenses or drop in income can be in direct connection to the disaster. If you were fired because your work place shut down with no connection to the disaster, then you are not eligible. If you lost your job because it was wrecked by a storm, or your expenses were raised because your car was crushed by a falling tree.

HUD Disaster Relief Question #3 - What kind of effect did this disaster had on the mortgage payments. If because of these two first questions you have difficulty to stay current on the mortgage, than the relief program is for you.

HUD Disaster Relief Question #4 - What other financial resources do you have? Have you any insurance ? Have you got paid by any insurance settlements? What other financial options and solutions do you have to pull yourself out from the disaster outcomes.

The lenders can delay or cancel initiation of foreclosure for 90 days.

FHA Disaster Relief Requirements

Beyond the above requirements there are a few more FHA requirements to be included in the FHA disaster relief program. Lenders were instructed to allow grace period before going for foreclosure, this moratorium can be for 90 days or a complete cancellation of the foreclosure process. In order to postpone any foreclosure on your FHA home loan, you need to check if you belong to one of these disaster categories. FHA Disaster relief foreclosure moratorium is granted to one of the three options bellow:

1. You or your family live within the geographic boundaries of a Presidentially declared disaster area, you are automatically covered by a 90-day foreclosure moratorium.
2. You are a household member of someone who is deceased, missing or injured directly due to the disaster, you qualify for a moratorium.
3. Your financial ability to pay your mortgage debt was directly or substantially affected by a disaster, you qualify for a moratorium.

The fourth group:

There is another group of people which were not facing foreclosure when the disaster happened they are the fourth group. For many other people, who where current on all their mortgage payments and were not in any foreclosure procedures, these three options above are not relevant. For people who did not miss payments and where on time until the disaster struck, getting a moratorium is not a solution. If you think you belong to the fourth group, you need to contact your lender and let them know your situation, let them know you may be having problems to keep up with the mortgage payments.

The FHA approved lenders where instructed to find financial solutions for people who because of the disaster are having problems to stay current on the mortgage. FHA approved lenders should check and evaluate each mortgage and borrower to find out how it was affected by the disaster, and find reasonable ways to help them through this FHA disaster relief program for homeowners.

FHA Disaster Relief Solution Possibilities

There are several options for solutions, each of the options will be evaluated by the lender and tailored per borrower’s needs. Before applying for the FHA homeowner disaster relief, prepare all the necessary documentation. The FHA and the lender will need to see insurance papers, medical records of injuries, death certificates for disaster victims. Make sure the lenders are aware to your situation and understands that you are in a presidential declared disaster area.

1. Lenders can postpone any extreme action, otherwise they might have choosing to take, such as not referring the late mortgage to foreclosure.

2. Lenders want to help you keep your home, and stay a paying borrower. They will try and search for available loss mitigation assistance. There are several loss mitigation solutions, and the best option will be chosen together with you.

3. In order to assist you stay a homeowner and struggle through, the lenders may look for forbearance plan, or execute a loan modification or a partial claim. This will take place to help the homeowner be able to get the financial issues back on track, and carry on with the new terms safely.

If you have contacted your lender and are no satisfied with the solution or you think there are better options for you within the FHA disaster relief program, do not hesitate and contact HUD-approved counseling agency toll free at (800) 569-4287 or contact HUD’s National Servicing Center.

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Other readers found this article relevant too:

1. All About Disaster Area Home and Property Loans

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FHA Home Improvement Loans With No Equity

Title 1 Home Improvement Loans by The FHA 2011

What are current FHA home improvement loan options for people with no equity? In the current days markets many homeowners found out that there is not enough equity on their home for the FHA HELOC (Home Equity Line of Credit) loans. Their home worth has dropped so deeply that there is not any equity to place as collateral for achieving a home improvement loan.

FHA Home Improvement No Equity Loan Options

The HUD (U.S. Department of Housing and Urban Development) want as many US citizens to be able to be homeowners. But being a home owner of a home which is unsafe or dangerous place to live in, is not really being a homeowner.

For this reason there are some FHA (Federal Housing Administration) loans which are not home-loans. These FHA loan purpose is to help people living in places which needs a constructional renovation and critical home improvements jobs, to be able to borrow the money for these improvements. These loans are for improvements for basic livability or utility of the property.

Like with all the FHA loans, the FHA does not lend the money it self, the FHA just insures the mortgage banks or lenders in case the borrower fails to pay the loan on schedule. The two main FHA home improvement loans are HELOC and Title 1 loans. Since the HELOC loans need equity and many peiople do not have enough equity for such loans, this review will focus on the FHA no equity Title 1 improvement loans.

FHA Title 1 Home Improvement For Single Family

Single family FHA home improvement loans can be granted for alterations, repairs and for site improvements. The basic requirements for the FHA no equity loans are that the borrower will be the home owner, or leasing the property or be the home buyer of the property that needs the renovation. People leasing the property need to prove they will be leasing the property 6 month after the last payment is scheduled.

Some of the common home improvements which are usually approved easily are related to FHA appraisal guidelines and the things a FHA appraisal inspection includes. The main issue is the improvement of the home, not just general paint cover or luxury needs renovation. The FHA will insure borrowers loans only for improvements by two main guidelines: health / safety and structural issues. These can be construction needs, roof, attics, basements, heating/cooling, sewage, adding a room, water installations ect…

Single Family FHA No Equity Loan Guidelines

The maximum amount of money you can borrow with a FHA insured loan depends on the type of property being improved. For a single family home improvement no equity loan the FHA insures up to $25,000. This sum of money can be paid back over 20 years! This sum of money is given with a fixed rate interest and can be paid off without any prepayment fees.

Another great advantage for the Single family FHA title 1 home improvements loan, is that if the sum that is borrowed is less than $7500, than this some is unsecured, it is not requested any mortgage against it, and it is actually like a regular bank loan, but with the 20 year extension, lower than bank loan rates, and no prepayments penalty fees.

FHA Title 1 Loans For Manufactured Houses

There are slightly different guidelines for FHA home improvements loans with no equity (Title I) when it comes to manufactured houses. The manufactured house loans have two main lanes which depend whether the manufactured house is placed on permanent foundation or not.

If the title 1 loan is requested for manufactured home which is not located on permanent foundations (and is private property and not real estate), then the maximum FHA Title 1 loan amount will be $7,500. This amount maximum loan term will be 12 years! The $7500 limit is because manufactured houses without permanent foundations can be gone easily, and this is the maximum amount granted without any security property being mortgaged against the loan. 

If the manufactured home is placed on permanent location and property taxes are paid on it, then the $25,000 will be the maximum given, just like a single family home improvement loan. The maximum life span for manufactured permanent houses like these is 15 years.

FHA Home Improvements Loans For Multifamily

For FHA improvement loans for property other than single family, there are slightly different guidelines, but still in the same frame logic. People living in multifamily homes can request and get approved for the Title 1 home loans for up to $12,000 per unit, and $60,000 for the whole building. The money can be used only for building alteration and repairs. By the HUD guidelines the loan can be paid back over 20 years (like single family) and without any prepayments fees.

 FHA Title 1 Home loans Regulations

The loan is given by approved lenders for such Title 1 home improvements loans. If you qualify for such a loan and the lender is not on the HUD approved list, than the lender need to recommend another lender which is on the HUD approved lenders list. The interest rate common for such loans is higher than the normal mortgage rate, but may still be lower than the regular bank rate for a conventional loan.

The property being improved must have been completed and occupied for 90 days, these loans are not given for houses under construction.

How To Begin Title 1 Application

The FHA home improvement Title 1 loans are given only to people with nice credit score (not the FHA minimum credit score), people with creditworthiness and the ability to pay the Title 1 loan on time for all the expected payments.

If your credit score is far from perfect or you have some negative items still on the FICO report, you better begin your process by raising your FICO score. Unless you rebuild your credit score, the FHA will have no incentive to approve your application, as the Title 1 loan is risky for the FHA.

Title 1 Home Improvement Process Explained

• So first you must repair your credit score to make it as high as you can.
• Than you need to get approved by the FHA ‘approved lenders list’.
• The third stage will be to find a repair company for the house.
• The company you find should be cleared by the Better Business Bureau or the local Chamber of Commerce, as there have been too  many frauds on these loans and HUD recommends to “beware of deceptive home improvement contractors”.
• The money once approved will be passed directly to the borrower or the constructing company.
• The FHA charges the borrower a fee for the cost of insurance.
• Payments need to be paid on time. No penalties for advance loan pay off.

If your credit is less than perfect, get it cleaned in 37 days otherwise you may not be approved for the FHA loan with no equity.

Minimum FHA Credit Score 2011

Minimum 2011 FHA FICO Score Required

There is a great confusion concerning the question “what is the minimum FHA credit score requirements”, the main confusion occurs when a borrower is approved for a FHA home loan, with his credit score of 570, and then gets rejected by the lender because they request a credit score higher than 640. This gets very common now at 2011, as FICO score approved by FHA is turned down by the local bank or lender.

Minimum FHA Score For 2011

The HUD  (U.S. Department of Housing and Urban Development) has set clear figures about the minimum requirements for the FHA backed loans. The minimum FICO score was decided by to opposite interests. On one side the need to help Americans reach their dream for owning a home. The second interest is to protect the federal funds from backing loans which will not be paid back.

The minimum FICO score can vary from the different FHA loan programs and the type of mortgage needed, so the best advice would be to find a FHA underwriter or councilor to help you learn the exact score needed for a specific case..

Minimum FHA Score Requirement – No Down Payment Mortgages

The most common FHA home loan usually referred to by borrowers interested in FHA mortgages, is the no money down mortgages. There are no zero down mortgages for the FHA any more, but the closest to 100% mortgage, is the 96.5% mortgage financing.

This means that unlike the regular mortgage borrower who needs to come to the closing meeting with 20% of the mortgage in cash down payment, the FHA borrower needs to come with only 3.5% down payments. The difference is huge! For a $150,000 mortgage, is $5,250 minimum downpayment for the FHA borrower compared to $30,000 minimum down payment for the regular borrower.

Since the risk for the FHA is high too as the federal administration, they set a minimum FICO score for these types of mortgages as 580. The borrower will need to prove their credit as 580 (minimum) or higher to be eligible for the FHA no down payment mortgages.

FHA Mortgage Programs For Less Than Minimum Score

Unfortunately many people do not even have the minimum score of 580 for the 96.5% mortgage finance program. For people like these there is another program with a different minimum FHA score requirement. People with credit score of 500-579 will be able to be approved for a FHA home mortgage, but in the following condition.

They will be allowed a mortgage with 10% down payment. Their score is so low, that insuring their mortgage is a greater risk on the federal tax payers money, so their FHA minimum down payment is higher than the FHA no money down options. They still get 50% off from the regular down payment of regular mortgage.

But FHA Minimum Score Are Irrelevant at 2011

It is important to remember that it is not the FHA that is lending the money, it is the bank! The FHA is insuring the bank (or lender) that the payments and mortgage returned will be completed on time and without delays. Because it is the banks who actually lend the money, it is up to them to decide which minimum credit score they approve.

As far as 2011 minimum score the banks and lenders request for FHA loan approvals is 620 or even at some cases 640. So having a clear 590 FICO score may be fine for passing the FHA approval but will end in a total rejection by the banks. In this case the borrower will need to raise their FICO score, by paying back debts and clearing negative items from all three credit bureau agencies.

Though it might be done alone, many choose to get some guided ebook help to follow all the insides tips and tricks. These ebooks are not expensive (less than $50) and can raise the credit score by 30-60 points which can be the difference between “yes” and “no”. A higher score will save them definitely thousands more with better rates and lower interest.

Fix your credit in 37 days.