HUD Implements New Manual Underwriting Standards

more+
less-
more+
less-

On January 21, HUD issued Mortgagee Letter 2014-02, which implements new manual underwriting standards announced in December 2013. The new standards and guidance will be effective for all case numbers assigned on or after April 21, 2014, and will apply to (i) loans involving borrowers without a credit score which were not scored against FHA’s TOTAL Scorecard; (ii) loans receiving a “Refer” scoring recommendation from FHA’s TOTAL Scorecard; and (iii) loans receiving an “Accept” scoring recommendation from FHA’s TOTAL Scorecard but which have been downgraded to a “Refer” by the underwriter. In addition, the standards apply when a loan receiving an “Accept” scoring recommendation is downgraded to a “Refer.” The HUD guidance addresses (i) maximum qualifying ratios for all manually underwritten loans based on the minimum decision credit score; (ii) revised compensating factors that must be used in order to exceed FHA’s standard qualifying ratios; and (iii) the requirement for cash reserves equal to one or more total monthly mortgage payments for manually underwritten loans involving one and two unit properties.

Written by:

Published In:

FHA
HUD

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© BuckleySandler LLP | Attorney Advertising

Don't miss a thing! Build a custom news brief:

Read fresh new writing on compliance, cybersecurity, Dodd-Frank, whistleblowers, social media, hiring & firing, patent reform, the NLRB, Obamacare, the SEC…

…or whatever matters the most to you. Follow authors, firms, and topics on JD Supra.

Create your news brief now - it's free and easy »

All the intelligence you need, in one easy email:

Great! Your first step to building an email digest of JD Supra authors and topics. Log in with LinkedIn so we can start sending your digest...

Sign up for your custom alerts now, using LinkedIn ›

* With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name.
×
Loading...
×
×