Homeowners' HUD Assistance
The U.S. Department of Housing and Urban Development (HUD) is responsible for the Federal Housing Administration (FHA) and the housing industry business. HUD maintains and expands homeownership opportunities through mortgage insurance on loans, refinancing of mortgage terms, foreclosure prevention assistance, construction and rehabilitation of homes, among others.
The Servicemembers Civil Relief Act
Members of the military can now feel secure financially, thanks to the Servicemembers Civil Relief Act (SCRA). The SCRA replaces the Soldiers and Sailors Civil Relief Act, and provides more financial protection for service members.
The SCRA gives relief for service members so they can devote full attention to their duties. It also relieves stress for their families by suspending certain civil obligations, such as:
- Outstanding credit card debt
- Mortgage payments
- Pending trials
- Termination of lease
In addition to the obligations mentioned above, the SCRA also provides service members and their families the following:
- Protection from eviction due to nonpayment of rent fees that are $1,200 per month or less (the prerequisite can go up to $2,932.31 per month to meet with today’s higher cost of housing and then adjusted annually to account for inflation)
- The right to terminate a housing lease if the service member receives permanent change of station orders or is deployed to a new location for 90 days or more
- Debt relief for service members who incur debt prior to military service. The SCRA limits debt interest to 6 percent. The excess interest above the 6 percent is permanently forgiven. Furthermore, the monthly payment must be reduced by the amount of interest saved during the covered period
- Increases the maximum policy coverage of life insurance that the federal government will protect from default for nonpayment from $10,000 to $250,000 while on active duty
- Prevents states from using the income earned by a service member in determining a spouse’s tax rate when they do not maintain their permanent legal residence in that state (also known as ‘double taxation’)
Individuals entering the military, called to active duty, or those already deployed are covered by the SCRA. The protection begins on the date the service member enters active duty and terminates within 30 to 90 days after being discharged from active duty.
For other housing concerns, you may apply for HUD housing assistance.
Fair Housing Act: Making Home Buying/Selling Easy
If you are a veteran, buying and selling a home is now easier than ever, thanks to the Fair Housing Act.
By nature, VA loans are designed to be flexible for veterans in order to insure the ease of acquiring and selling a home. This flexibility also applies to potential buyers that a veteran sells their VA home to.
For example, when a veteran buys a home with a VA mortgage, the lender or homeowner’s association cannot force him or her into any restrictive contract. Homeownership agreements or loan contracts must allow free sale, transfer or assumption of a property to anyone a veteran wishes to sell to or when. But at the same time, the veteran must also provide the same liberty to any potential buyer.
This rule is stated under the Fair Housing Act. It specifically states that “[t]he veteran certifies…neither the veteran, nor anyone authorized to act for the veteran, will refuse to sell or rent, after the making of a bona fide offer, or refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny the dwelling or property covered by this loan to any person because of race, color, religion, sex, handicap, familial status or national origin.”
Furthermore, the Fair Housing Act also states that, “civil action for preventive relief may be brought by the Attorney General of the United States in any appropriate U.S. district court against any person responsible for violation of the [Fair Housing Act].”
The bottom line, veterans who apply for a VA home loan must agree to abide by the Fair Housing Act when selling or transferring a property.
The Fair Housing Act makes buying and selling a home with a VA mortgage fair and easy, not just for veterans, but for homebuyers as well.
If you have other housing concerns, you may be qualified to apply for HUD housing assistance.
Loan Options for Military Couples
Married couples where both are members of the armed forces (also known as “mil-to-mil couples” or “mil-to-mil spouses”) now have options for VA home loans and VA-insured loan benefits.
Home Loan Options
Because both mil-to-mil spouses are entitled to VA loans, one of the most common courses of action is to use one of the entitlements for a mortgage and reserve the other for later use.
A non-applicant spouse would only be financially obligated on the VA loan if he or she co-signed or co-borrowed on a mortgage—or in cases where the loan originates in a community property state.
Another option that mil-to-mil spouses have is to combine VA loan entitlements. For example, if one spouse who has already used his or her VA loan entitlement on a previous VA home loan but has some left over, he or she can use it with the other spouse’s VA loan entitlement.
Couples can also opt to split their entitlements evenly for a joint VA home loan. In this case, both spouses carry financial obligation for each of their halves of the mortgage. The loan agreement would feature equal amounts of VA loan entitlement from each party named on the mortgage.
In all the choices mentioned above, it is important to note the VA Lender’s Guide states that, “any person who uses entitlement on a joint loan must certify intent to personally occupy the property as his or her home. Any borrower on a joint loan who does not use entitlement for the loan (such as a nonveteran) does not have to intend to occupy the property.”
What the rule says is that two married veterans who use their VA loan entitlements separately cannot purchase two homes at once with VA loans for using one as an investment property (e.g. renting it out) or summer home. The borrower must intend to occupy the home purchased with a VA mortgage.
For more housing concerns, you may also apply for HUD assistance.
VA Housing Grants For Disabled Veterans
Disabled veterans should rejoice. The Department of Veterans Affairs has introduced special grant programs for their needs. The programs aim to provide a barrier-free living environment for disabled veterans and service members.
The VA 2102(a) Grant
With the Specially Adapted Housing (SAH) grant, also known as VA 2102(a), qualified borrowers can pay for as much as half the cost of a specially adapted house (as approved by VA regulations) or a maximum of approximately $63,000.
The grant can be used to purchase a home already adapted for disabled access, but can also be used to modify a home to make it accessible.
The VA 2102(b) Grant
The Special Home Adaptation (SHA) Grant, also known as VA 2102(b), is similar to VA 2102(a) in that it is for adapting a home. However, the VA 2102(b) grant money can be used for adapting a home owned by the disabled veteran’s family. This only applies if the veteran intends to live there as his or her permanent residence.
The VA Temporary Residence Adaptation Grant
The VA Temporary Residence Adaptation (TRA) Grant provides aid in modifying a family member’s property to meet the veteran’s or service member’s special needs. Qualifying veterans can receive up to $14,000 for the VA 2102(a) grant or up to the maximum amount for a VA 2102(b) grant.
For a veteran or service member to receive the 2102 and TRA grants, the Veterans Service Center (VSC) must approve his or her application. Veterans and service members who do not have VA-recognized disabilities must wait until they have a disability rating in order to qualify.
You may also apply for HUD assistance if you need help with housing.
Lower Funding Fees for VA Loans
The Department of Veterans Affairs announced lower funding fees for VA loans issued on or after October 1, 2011.
Changes for first-time borrowers
VA loan funding fees for first-time VA borrowers with a down payment of 5 percent or less, as of October 1, is now 1.40 percent (from 2.14 percent) for active duty veterans and 1.65 percent (from 2.40 percent) for Guard and Reserve veterans who qualify. The funding fees also go down for those making down payments of 5 percent or more and 10 percent or more.
Changes for subsequent use borrowers
For subsequent use borrowers (anyone who has taken out a previous VA home loan and want to do so again) with a down payment of 5 percent or less will pay a VA loan funding fee of 2.80 percent instead of the previous 3.30 percent. This is applicable for both active duty and Guard and Reserve veterans.
For veterans putting down 5 percent or more, the fee will drop to 0.75 percent.
The fee is scheduled to drop each subsequent year. On October 1, 2012, it is expected to go down to 2.15 percent and even lower on the same month the succeeding year. This does not apply though for those who are putting down 5 percent or more.
More possible changes
For the time being, those mentioned above are the only changes made effective on October 1, such as fees for VA loan assumptions and Interest Rate Reduction Refinancing loans. But more changes may occur in the future for other types of VA loan transactions.
For other housing concerns, you may also apply for HUD assistance.
VA Home Loans
If you are a veteran or are on active duty, the VA Home Loan program can help you purchase a home with favorable loan terms at a rate of interest that is usually lower than the rate charged on other types of mortgage loans.
What a VA Loan can be used for
The VA loan can be used for several things, such as:
· Buying a home, a condominium unit, or a unit in a cooperative
· Building a home
· Purchasing and improving a home
· Improving a home (e.g. installing energy-related features, energy efficient improvements)
· Refinancing an existing home loan up to 90 percent or refinancing an existing VA loan to reduce the interest rate
· Buying a manufactured home and/or lot
Here are some good reasons to consider the VA program:
· You can buy a home without a down payment as long as the sales price doesn’t exceed the appraised value.
· No mortgage insurance premiums to pay each month.
· You won’t need to buy private mortgage insurance.
· VA rules limit the amount you can be charged for closing costs.
· The seller may pay the closing costs.
· Choice of repayment plans for thirty-year loans.
· The lender can’t charge you a penalty fee if you pay the loan off early.
· VA may be able to provide you with some assistance if you run into difficulty making payments.
· You don’t have to be a first-time homebuyer to qualify.
· You can reuse the benefit.
· VA-backed loans are assumable.
Who are eligible?
The following are eligible to receive a VA loan:
· Active duty personnel
· Certain reservists and National Guard members
· Surviving spouses of persons who die on active duty or die as a result of service-related disabilities
· Certain spouses of active duty personnel who are (a) missing in action, (b) captured in the line of duty by a hostile force, or (c) forcibly detained by a foreign government power
Getting a VA Loan
Getting a VA loan is relatively easy:
1. Apply for a Certificate of Eligibility (CoE)
2. Decide on a home to buy and sign a purchase agreement
3. Order an appraisal from VA (usually done by the lender)
4. Apply to a mortgage lender for the loan
5. Close the loan and move in
For mortgage and housing concerns, you may also apply for HUD assistance.
Homeownership Working Its Way Up
Americans have reason to consider applying for HUD housing assistance as homeownership rates rise.
Despite the worst housing market bust in US history, some signs of hope are starting to show as homeownership grew between the second and third quarter.
The rate of homeownership rose to 66.3 percent during the third quarter of 2011 from 65.9 percent in the second. Moreover, rental vacancy is up from 9.2 percent to 9.8 in the second quarter despite being 10.3 percent this time last year.
This news comes as a pleasant surprise to homeowners who have been expecting the market to continue tumbling. Since homeownership peaked in 2004 at 69 percent, it has declined to historic lows due to the housing and foreclosure crisis and a frail economy.
Adults sustain ownership rates
The increase in homeownership rates comes mostly from older adults homeowners while homeownership rates for younger and middle-aged Americans are on a decline.
Although numbers are down from 73 percent this time last year, adults between the 45 to 54 year old of age have a 72.7 percent homeownership rate. For adults between the ages of 25 to 44, the homeownership rate is at 63.4 percent, also down from last year’s rate, which was 65.2 percent. For those under the age range of 35, the rate is the lowest at 38 percent.
Homeownership across the nation
Homeownership is highest in the Midwest at 70.3 percent and the South at 68.4 percent. It’s lower though in the Northeast at 63.7 percent and West at 60.7 percent.
Vacancy to rise
Because of the decreased homeownership rate among younger and middle-aged Americans, and increase among older adults, vacancy is expected to rise in the following years.
Among the millions of properties across the country, 85.8 percent is occupied. The remaining 14.2 percent are vacant, with 3.2 percent for rent, 1.4 percent for sale, 0.9 percent is temporarily vacant and 5.4 percent currently held off the market due to non-primary residence (2.5 percent) or for other reasons (2.9 percent).
Across the U.S., vacancy was highest in the South at 12.2 percent and Midwest at 10.5 percent, but lower in the Northeast at 8 percent and West at 7.3 percent.
Below is a list of the top towns for rental vacancy and owned-home vacancy.
Top 10 towns for rental vacancy (by metropolitan statistical area)
- Houston/Baytown/Sugarland, TX: 12.1 percent
- Tucson, AZ: 17 percent
- Poughkeepsie, NY: 17 percent
- Orlando, FL: 16.6 percent
- Greensboro/High Point, NC: 16.3 percent
- Kansas City, MO: 15.2 percent
- Detroit/Warren/Livonia, MI: 14.9 percent
- Memphis, TN: 14.8 percent
- Charlotte/Gastonia/Concord, NC: 14.6 percent
- Indianapolis, IN: 14.5 percent
Top 10 towns for owned-home vacancy (by metropolitan statistical area)
- Dayton, OH: 6.5 percent
- Columbia, SC: 5.1 percent
- Las Vegas/Paradise, NV: 4.9 percent
- Atlanta/Sandy Springs/Mariette, GA: 4.6 percent
- Poughkeepsie/Newsburgh, NY: 4.6 percent
- Richmond, VA: 4 percent
- Tampa-St. Petersburg/Clearwater, FL: 3.8 percent
- Grand Rapids, WY: 3.8 percent
- Virginia Beach/Norfolk/Newport News, VA: 3.7 percent
- Chicago/Naperville/Joliet, IL: 3.1 percent
New Hope For The Wrongly Foreclosed
Following the recent robo-signing scandal involving fourteen of the nation’s largest mortgage banks, the Office of the Comptroller of the Currency is now giving new hope for borrowers who feel their homes were wrongly or inappropriately foreclosed in 2009 and 2010.
Fully funded review of foreclosures
The Office of the Comptroller of the Currency will be doing an independent review of foreclosure actions, which will be funded by the banks involved. These banks include Bank of America, Chase, Citibank, Wells Fargo, GMAC and EMC.
As for borrowers who suffered financially through errors, misrepresentations or other deficiencies from the scandal, they will get some kind of remediation.
Hundreds of thousands of requests expected
The Comptroller of the Currency is expecting hundreds of thousands of requests but they are hopeful that they will have the capacity to handle all of them.
But considering that there are potentially four and quarter million eligible borrowers, there is a possibility that the servicers will be overwhelmed and this could impact the foreclosure process. But that’s just a worst-case scenario and the OCC remains hopeful it won’t reach that point.
Could a borrower get his home back?
There’s a possibility that borrowers can get their homes back, but it is quite unlikely. Most of the homes were probably already legally sold to someone else. What might happen instead is monetary compensation or reimbursed fees.
Nevertheless, the goal of participating mortgage servicers is to help borrowers stay in their homes and hopefully resolve as many issues as possible that were raised in the reviews.
For more mortgage and housing concerns, apply for HUD assistance.
A Guide To The New Mortgage-Refi Plan
With the new mortgage-refi plan, the government hopes to help over 1 million homeowners by easing the eligibility rules for its Home Affordable Refinance Program (HARP).
The Home Affordable Refinance Program (or HARP) helps homeowners refinance their mortgages at lower rates. The government estimated that it would help 4 to 5 million homeowners. But as of Aug. 31, fewer than 900,000 have successfully refinanced through the program.
The reason why only a few benefited from the program was simply because many were not eligible. For example, applicants of the program needed to have home values of no more than 25 percent below what they owed their lenders to be qualified for the program. That only made up of 10 percent of borrowers.
Another problem was that homeowners had to spend more for closing costs and appraisal fees. For example, a $200,000 loan would have a fee of $2,000.
The government has eased eligibility rules. For one, eligibility will no longer be affected by how far a homeowner’s home’s value has dropped. Some fees (such as for closing, title insurance and lien processing), including those for refinancing into a shorter-term mortgage, will also be done away with.
The new plan also hopes to make lenders more obligated to offer refinance loans as the new changes will allow banks to not buy back mortgages from Fannie or Freddie.
To qualify for refinancing, a loan must have been sold to Fannie and Freddie before June 2009. Homeowners can determine whether their mortgage is owned by Fannie or Freddie online. Mortgages that were refinanced over the past 2 and a half years are NOT eligible.
Homeowners must also be current on their mortgage. One late payment within six months, or more than one in the past year, would mean disqualification.
With the new plan, the government is expecting at least 1 million more people to qualify, most especially homeowners who are stuck with high mortgage rates with little or no money. They are also expecting the average annual savings of a US household to be $2,500, which, hopefully could be enough.
When will it start/end?
The program could be in place by Dec. 1 and will be extended for 18 months, through 2013.
Housing assistance program
If you do not qualify for HARP, homeowners can apply for HUD housing assistance for help with mortgage and other housing concerns.
Getting A Mortgage In Today’s Real Estate Market
Despite the bad situation of the country’s real estate market, rates are at an all time low. Qualifying, though, is more difficult than ever. To help you through the process, we have come up with a few tips and tricks.
All-time low rates
Is now a good time to get a mortgage? Absolutely. With a national average interest rate for 30-year fixed-rate loans of 4.2%, 3.5% for 15-year fixed-rate loans, and a 3% initial rate for a 5/1 adjustable-rate mortgage (ARM), these are the best rates you’ll see for a long time.
Getting a loan
Getting a loan is now more challenging than ever as lenders are more selective towards borrowers—but it’s not impossible. Of course having a good credit rating really helps your chances, as that is what they look at primarily.
They’ll also look into your monthly housing expenses (principal, interest, taxes, hazard insurance, private mortgage insurance and association fees). Those shouldn’t account for more than 28% of gross monthly income while your total debt shouldn’t exceed 36%.
Where to look for the lowest rate
If you’re looking for the lowest rate, your mortgage lender may be able to give you a wholesale rate that’s usually better than the ones a bank’s loan officers might offer. These correspondent lenders can both find you the loan and approve it.
If you’re trying to consolidate a loan, try a mortgage broker instead of going to a retail loan officer. However, some lenders prohibit brokers from originating loans of more than $417,000.
Documentation you might need
You will need the following documentations:
- Pay stubs for the past 30 days
- W-2 forms for the past two years
- Two years of tax returns (if you are self-employed)
- Profit-and-loss statement[RR1] (self-employed)
You might also want to present the following:
- Bank statements for the past 60 days
- Retirement-account statements for the past 60 days
- Investment statements for the past 60 days
- Letters of explanation for red flags in your statement
If you have a fixed rate only slightly higher than current rates or an ARM that adjusted downward in the past year, it’s best to make sure you can get back the cost of refinancing before you sell your home.
If you have a second mortgage or a home-equity line of credit, and simply want to refinance the first mortgage, refinancing might be a bit more complicated.
Firstly, your total housing debt shouldn’t exceed 80% of your home’s market value, or else the holders of the second lien may refuse to agree to stand behind the first-mortgage holder for repayment if you default.
If that happens, you could try consolidating all your housing debt into a single mortgage so you can use some of the loan proceeds to pay off your second lien. You will need to have at least 20% equity to get a conforming cash-out refi or 25% to 30% equity if the loan is more than $625,500.
The best way to do comparison-shopping for loans is to look at good-faith estimates (GFEs). GFEs give you all the information you need—the type, rate and features of the loan as well as the lender’s cost to originate the loan and third-party fees you’ll owe after.
Apply for HUD housing assistance
It might also be a good idea to apply for HUD assistance to help you with your housing expenses and concerns.