FHA Mortgage loans- WHEN YOU ALREADY OWN A HOME.
IMPORTANT – EFFECTIVE WITH CASE NUMBERS PULLED ON OR AFTER 9-19-08
DID YOU KNOW?
Recently, FHA and others in the mortgage industry have observed an increasing number of homeowners who have chosen to vacate their existing principal residence and purchase a new residence. This has been occurring as some homeowners, given the rising price of fuel, are relocating to homes nearer their employment, or are taking advantage of other home buying opportunities arising in the marketplace. Due to FHA’s concern that some homebuyers in these transactions may attempt to provide misleading information regarding the rental income of the property being vacated to qualify for the new mortgage, FHA is instituting underwriting guidance designed to assure that the homebuyer can make payments on the full debt service of both mortgages. Consequently, beginning with case number assignments on or after 9-19-08 and until further notice, the underwriting analysis may not consider any rental income from the property being vacated except under circumstances described in this Mortgagee Letter. The exclusion of rental income from property being vacated is being instituted on a temporary basis while FHA further analyzes this situation to determine whether permanent measures may need to be taken. This will assure that a homeowner either has sufficient income to make both mortgage payments without any rental income or has an equity position not likely to result in defaulting on the mortgage on the property being vacated. In either case, this guidance is directed to preventing the practice known as “buy and bail” where the homebuyer purchases, for example, a more affordable dwelling with the intention to cease making payments on the previous mortgage. Although the property being vacated will not have a mortgage insured by FHA, surrounding properties may and, thus, FHA may be indirectly negatively affected should that property result in a foreclosure.
Exceptions:
Rental income on the property being vacated, reduced by the appropriate vacancy factor may be considered in the underwriting analysis under the following circumstances:
•Relocations: The homebuyer is relocating with a new employer, or being transferred by the current employer to an area not within reasonable and locally recognized commuting distance. A properly executed lease agreement (i.e., a lease signed by the homebuyer and the lessee) of at least one year’s duration after the loan is closed is required. FHA recommends that underwriters also obtain evidence of the security deposit and/or evidence the first month’s rent was paid to the homeowner.
•Sufficient Equity in Vacated Property: The homebuyer has a loan-to-value ratio of 75 percent or less, as determined by either a current (no more than six months old) residential appraisal or by comparing the unpaid principal balance to the original sales price of the property. The appraisal, in addition to using forms Fannie Mae1004/Freddie Mac 70, may be an exterior-only appraisal using form Fannie Mae/Freddie Mac 2055, and for condominium units, form Fannie Mae1075/Freddie Mac 466.
Advantages to Using an FHA loan to purchase your next home include:
Florida home buyers should know the many advantages of the FHA mortgage loan programs. FHA home loans were created to help increase home ownership. For the Florida home buyer the FHA program can simplify the purchase of a home, making financing easier and less expensive than a conventional mortgage loan product. Some highlights of the Florida FHA loan program include:
Minimal Down Payment and Closing costs.
- Down payment less than 3% of Sales Price Gifts are allowed
- Seller can credit up to 6% of sales price towards closing and prepaid costs.
- 100% Financing available
- No reserves required.
- FHA regulated closing costs.
Easier Credit Qualifying Guidelines such as:
- No minimum FICO score or credit score requirements.
- FHA will allow a home purchase 1 year after a Bankruptcy.
- FHA will allow a home purchase2 years after a Foreclosure.
Apply Today at http://www.fhamortgagefhaloan.com/
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Mr Mortgage on Loan Mods, TARP & Home Sales
Help answer the question about mortgage loan
How to apply for mortgage loan modification?I have lost my job and am now working as a cashier at a grocery store. The problem is that my new salary is not enough to cover the mortgage. I am in a very tight situation so I am curious to know my options. I have heard that applying for a mortgage loan modification can help reduce my monthly payments. Has anyone had experience with mortgage loan modification please let me know what are the steps to to lowering my mortgage payments.
So, just to make sure I'm understanding everything: It sounds like you are now the sole person in title to this property, and that you have a deed of trust on the property for $190K, but the property is really, in your estimation, worth about $150K or so.
I would first get a better estimate of the property–check on zillow.com to see how they value it (although your last transfer may have thrown values for your area out of whack). If you could work out some kind of forbearance plan with your lender and some kind of deal with your renter wherein she agrees to bring her payments current until you can sell the property–AND you can verify that the property is worth at least what you owe on it, trying to sell the house might be a good option. Otherwise, you could either see if the bank would accept a "short sale"–a sale for less than what is owed on the house–though honestly, from what I've heard, you and your realtor would really have to do a lot of work and be very persistent to make that happen. Or you could accept the foreclosure, or sign a Deed in Lieu of Foreclosure, signing the property over to the bank. (In order to do that, you would need to contact the bank and have them agree to it, and send you the proper paperwork.) The Deed in Lieu will be less trouble for everyone, but, at least to my knowledge, won't negatively affect your credit score any less than the foreclosure would.
Generally speaking, banks have the option to go after the debtor to make up for what they've lost on the foreclosure (i.e., any fees, liens, and the discrepancy between the loan amount and what they can sell the house for), but they usually won't. Both foreclosure and a deed in lieu are going to destroy your credit, but it sounds like it's pretty much trashed anyway.
At this point, I think that lying on your loan papers is the lesser of your problems. If you can afford it, hire a real-estate attorney in the state where the house is located. If not, check the state's statutes to see if they have anything to say about your responsibilities to your tenant in this situation.
Is bankruptcy an option where you live? It probably wouldn't help with the house–and it doesn't sound to me like keeping it is in your best interest, honestly–but it might help give you relief from the debt situation that drove you to put yourself in this mess.
I'm sorry that your friend took advantage of you in this way.
Oh–as for the POA option that another commenter suggested–be aware that many banks and title companies won't accept them unless they've been drawn up recently (six months or so) and are done on their forms. This might be a good option for you if you find a buyer for the house and can get the escrow company handling the closing to draw up a limited POA, but otherwise, you can send the signed paperwork back by UPS or DHL or whatever; it'll be a little more expensive and take a little longer, but it's done all the time.
I used to underwrite FHA loans and you CANNOT get an FHA loan with less than 2 years out of a bankruptcy.
You know how long it takes to get an approval for an FHA loan? Takes me about 20 minutes to underwrite one…so assuming the mortgage company is busy, in 3 days they should have a CREDIT decision…this has NOTHING to do with whether the home appraises, if title is clear, etc.
Call your loan officer and tell them you want TODAY to know if the UNDERWRITER has CREDIT approved the file or not.
I would bet you a dollar he has only pulled credit and hasn't even sent it to an underwriter yet.
FHA guidelines says you have to be 2 years out of a bankruptcy before you will even be considered and have re-established CREDIT…utility bills does not qualify for "re-established" credit.
He is getting re-established credit confused with alternative credit, which FHA will accept, but only if you don't have a bankruptcy.
PS: If he asked you to bring in paystubs and W-2's that means NOTHING…all that does is prove your income.
It doesn't matter if you make $100,000 a year, FHA won't do a loan less than 2 years out of bankruptcy…period.
Here is the proof:
http://www.fha-home-loans.com/loan_qualifying_fha_loans.htm
There are ZERO exceptions to that guideline.
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very professional response b of a.
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Ampedee, I’m a mortgage broker and banker. I used to work for one of the largest banks in the country and to be honest our fees and costs were so much higher than brokers. Large banks spend money on advertising and pay salaries.