As part of the Clinton Administration's undying efforts to boost home ownership, the Department of Housing and Urban Development has reminded lenders originating government-insured FHA mortgages that disabled buyers may be eligible for special consideration.

Encouraging lenders to exercise "flexible, yet sound underwriting that fully captures disabled persons' ability to own a home," HUD Assistant Secretary and Federal Housing Commissioner William Apgar says he's "concerned that too many" people with disabilities are rejected because they have limited financial resources or require special housing needs.

Under the FHA's underwriting guidelines, if the sources of a borrower's regular income are not subject to federal taxes, the amount of the continuing savings may be added to the borrower's gross income. Certain types of disability and public assistance payments, military disability pay and disability social security are not taxable.

According to the rules, though, the percentage of income that may be "grossed up" must be in conformance with the appropriate tax rate, and additional allowances for dependents are not acceptable.

When analyzing a disabled loan applicant's credit history, the guidelines also allow lenders to give greater weight to the overall pattern of behavior than to isolated occurrences of slow or missing payments. "A period of financial difficulty in the past, especially if related to the disabling conditions, does not necessarily make the credit risk unacceptable if a good payment record has been maintained since," Apgar advised lenders in a recent memo.

When a credit record reveals delinquencies, lenders must determine whether the would-be borrower was late because he simply didn't care or couldn't manage his finances, or because of factors beyond his control.

HUD also is urging lenders to "encourage" handicapped borrowers to consider one of the two FHA home improvement loan programs Title I and 203(k) that can be used to pay for modifications to the home, including exterior ramps or interior reconstruction to permit wheel chair accessibility.

In addition, Apgar has reminded lenders that disabled borrowers are just as eligible for higher than normal qualifying income-to-expense ratios and down payment assistance as any other customer.

Lenders always have the option of giving weight to what's known as "compensating factors" when determining the eligibility of borrowers who do not meet the standard ratios, he pointed out in his memo. And all borrowers can use gifted funds to cover their downpayments.

"The Department," the FHA Commissioner said, "wishes to expand the availability of FHA mortgage insurance to persons with disabilities with sound underwriting practices."

Published: August 8, 2000

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.