Cynthia Alfred's Blog » Federal Housing Administration (FHA)

Shortly After a Short Sale…

Cynthia Alfred — Thu, 04 Mar 2010 22:40:28 +0000

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…what happens? When can I purchase a home again? How long will it affect my credit? Is it worse than a foreclosure? Can the bank come after me for the difference between the sales price and my current loan?

It’s a fact that short sales are on the minds of many people and the Federal Housing Administration (FHA) has taken notice.

On December 6, 2009, FHA rewrote their borrower eligibility guidelines for short-sellers looking to once again own a home. These changes went into effect immediately, and for any past homeowner that has gone through a short sale, these changes are huge!

If you stayed current on every bill you had–including your mortgage for the last twelve months–while going through the short sale process, you can purchase another home the day after your short sale closes. According to FHA’s Mortgagee Letter 09-52, as long as you did not pursue a short sale agreement simply to “take advantage of declining market conditions, and purchase at a reduced price a similar or superior property within a reasonable commuting distance” then you are eligible for an FHA insured loan. However, if you were late on your mortgage, late on any revolving debt, or in the process of foreclosure while going through your short sale, then all bets are off. Potential buyers in cases such as this have to wait a mandated thirty-six months (three years) before purchasing a home through FHA.

So while many of the original questions in this column remain a mystery solved only on a “lender-to-lender” case-by-case basis, we now have a nationally recognized policy for how shortly after a short sale you can purchase a home.

Brentwood Press, Trevor’s Weekly Mortgage Matters, Trevor Frey, February 19, 2010

FHA Flipping Rule Update

Cynthia Alfred — Sun, 17 Jan 2010 00:22:39 +0000

GREAT News! As of February 1, 2010, there will no longer be a 90 Day Flip rule for FHA. This means investors will now accept more FHA offers and allow more buyers to qualify for properties. It’s only good for 1 year and can be terminated at anytime by HUD if they find out it leads to increases in defaults. It’s going to be important to move these properties quickly and it will be important that buyers are pre-approved with a lender that can close FHA deals in a timely manner. For more information regarding this rule, please give me a call at (925) 216-0860. To search the MLS for free and to view homes for sale, go to: www.CynthiaAlfred.com

What Are The Benefits Of An FHA Mortgage?

Cynthia Alfred — Thu, 14 Jan 2010 15:15:06 +0000

FHA offers low down payment options, eligibility with less than perfect credit, a loan at a reasonable cost, and help if there is ever trouble making the mortgage payment. Because an FHA mortgage insures the lender against loss, an FHA mortgage typically has an interest rate that is competitive with the best in your market and lower than the rates charged for subprime and other non-prime mortgages.
FHA not only helps people buy a home, but helps them keep it as well. In return for protecting lenders against loss, FHA requires financial institutions to offer assistance to borrowers experiencing difficulty making mortgage payments.

If you have questions on this or any other real estate topic, call me at (925) 216-0860. To search the MLS for free and view homes for sale, go to: www.CynthiaAlfred.com.

FEATURES WORTH KNOWING ABOUT AN FHA LOAN

Cynthia Alfred — Sat, 16 Jan 2010 22:15:33 +0000

FHA adopted the industry appraisal standards permitting the use of the Fannie Mae appraisal forms with no additional specialized documentation, no Valuation Conditions form or Homebuyer Summary.
FHA has eliminated unnecessary requirements to make minor repairs
The homebuyer and the seller, individually or jointly, can pay closing costs as agreed to in the sales contract. FHA no longer limits what closing costs the homebuyer is permitted to pay.
Caps on payment and debt-to-income ratios are more generous than most standard conforming mortgage products. The payment-to-income ratio may not exceed 31% and the debt-to-income ratio may not exceed 43%.
A minimum credit score is not required. In fact, one may not be turned down for an FHA mortgage solely for lack of credit history.
The buyer’s entire cash investment–as little as three and one-half percent–can be a gift from a family member, employer, charitable organization or local government entity.
The seller can contribute up to six percent of the home’s price toward closing costs through a seller’s concession.
There are no prepayment penalties on FHA-insured mortgages.
U.S. citizenship is not required but, for those who are not citizens, they must be lawful permanent or non-permanent resident aliens with a valid Social Security Number.

Since FHA was created in 1934, it has helped more than 34 million families become homeowners, many by working with their REALTOR to achieve their dream of homeownership. Backed by the full faith and credit of the Federal government, FHA-insured mortgages are one of the safest and most affordable types of mortgages available to homebuyers.

If you have questions on this or any other real estate topic, call me at (925) 216-0860. To search the MLS for free and view homes for sale, go to www.CynthiaAlfred.com

National Association of Realtors