I'm still just not getting it about FHA loans (loan, real estate, approval)

[sushi66]

When I asked here before, it didn't sound like anything was "wrong" with an FHA loan... some brokers can't do them because they don't qualify to arrange them... But I'm looking at homes for sale and some of the listings wording is "We'll *even* take VA and FHA loans!" and my real estate agent the other day said, "Well I mean, if you were getting an FHA loan" like it was a bad thing.

What's the deal?

[ShanetheMortgageMan]

FHA & VA loans have additional property standards that must be met, thus a lot of bank owned properties, and other sellers who don't want to have to fix/repair anything on their home before it can be sold, do not want to accept offers that are using FHA or VA financing. It actually is a time saver because if they know the home won't meet FHA guidelines they are telling you that upfront so you won't waste your time making an offer, paying for an appraisal, etc., just to find out you need to repair something in order for you to complete the purchase transaction. These additional property standards have actually loosened up a bit, but in the past were pretty rigid, so a lot of people still think that the property guidelines are hard to meet.

[sushi66]

Thank you again Oh Knowledgeable Shane. That makes perfect sense. Well then, that works out for both the seller and for me - I'm not looking for a home that needs lots of repairs, so indeed it is good to know up front. I assume FHA financing doesn't care if the carpet needs to be changed to wood, the formica countertops hurt my eyes, little stuff like that? My agent's comment also now makes sense, because soon after he said it, he also mentioned that his clients on this particular house aren't interested in making any repairs (i.e. the double pane windows have separated and one is cracked).

[renriq02]

There are a lot of brokers who just started doing FHA/VA, and this can be a problem for the buyer.

VA has the strictest appraisal guidelines of all the residential loans I know.
FHA isn't that bad.

VA/FHA can be a very good product if you have a low down payment and/or if you have a low credit score.
Even people with 800 credit scores are using FHA because they don't want to put a lot of money down.

Also, most lenders may take 1-2 weeks just for an approval on the borrower for FHA/VA. This wouldn't be a problem if the borrower was approved before shopping for a home, but most of the time that's not the case.

[DanBev]

We had an inspection and appraisal for a FHA loan.The only thing wrong was romex fastened to wood posts etc.,been that way for 8 years,have to put the wire in conduit or remove,this on my back porch.FHA considers it a fire hazard and hazard to kids.Kind of funny but what is stopping someone after close.

[yvonne1134]

How would an underwriter know if I had an existing FHA loan. It does not show up on my credit. Is there a way FHA would know and kill my current deal?

[rcarrillo]

Originally Posted by yvonne1134

How would an underwriter know if I had an existing FHA loan. It does not show up on my credit. Is there a way FHA would know and kill my current deal?

Thats strange that you have a mortgage and its not showing up on your credit report. There are ways for the lenders to know.

1) If they ask for your tax returns, they could see that you have a mortgage tax deduction and ask about it.

2) If you need to show your current residency or rental history, you will need to show the information on ownership.

3) When the set up an FHA case #, they do a search on the buyer, seller, Realtors, brokers, lenders, appraisers, etc. They want to make sure that none of the parties in the transaction have been sanctioned by HUD and are unable to work on FHA loans. Typically during that or the mortgage insurance set up they will see any records you have with FHA loans.

4) Lenders routinely run a report to check for ownership on other properties. If you get by the first 3 issues without raising a red flag, the real estate records search of you will show the property and lead to questions. They do so for just this sort of case. Someone that bought a home last month but its not reporting on credit yet (takes 60 days from closing sometimes to show on credit).


The point is, why are you even commiting FRAUD and trying to apply for a 2nd FHA loan without disclosing the current one if you know it is wrong? This is how people got into problems, and even if you are a "good risk" it is still fraud. There are plenty of checks during the process and if you get caught, you will lose earnest money deposits and any inspections and appraisals that have been done... and then there is the chance that they go after you for fraud as well.

[sh9730]

rcarillo,

I think somehow you misinterpreted the OPs comment about FHA underwriting....when putting it in context of the other posts, I believe they are just asking how a lender would know that it is FHA loan vs. conventional....least thats the way I read it!

Sounds like the OP is very limited in their knowledge (so far!) of the loan/homebuying process and is just trying to educate themselves....I got NO indication of any fraudulent intent!

Edit - Cancel last! I just saw that the underwriter question was not from the OP! Sorry - still I dont neccessarrilly see fraud here.....just a simple question as to how a new lender would know what kind of loan they had.

[renriq02]

i agree with rcarillo

when people are more concerned about an 'underwriter killing their deal' then you know something is wrong

Originally Posted by sh9730

rcarillo,

I think somehow you misinterpreted the OPs comment about FHA underwriting....when putting it in context of the other posts, I believe they are just asking how a lender would know that it is FHA loan vs. conventional....least thats the way I read it!

Sounds like the OP is very limited in their knowledge (so far!) of the loan/homebuying process and is just trying to educate themselves....I got NO indication of any fraudulent intent!

Edit - Cancel last! I just saw that the underwriter question was not from the OP! Sorry - still I dont neccessarrilly see fraud here.....just a simple question as to how a new lender would know what kind of loan they had.

[DvlsAdvc8]

Sounds like someone in a bad mortgage who wants to pick up another house and then walk away from the old one?