FHA Refinance Loan
A registered DE underwriter must fully underwrite
those applications where the AUS refers the loan
application to an underwriter for review and comply with the
underwriting requirements described in Handbook HUD 4155.1 REV-5,
Mortgage Credit Analysis, and applicable mortgagee letters and other
policy directives.
Chapter 1 of this User Guide describes the process for submitting
loans, the programs and property types eligible for risk assessment
by FHA's Mortgage Scorecard, and data integrity issues. Chapter 2
describes underwriting issues and contrasts the documentation
requirements between loans rated as accept/approve and those rated as
refer, and details system overrides and manual downgrades. Chapter 3
briefly describes mortgage endorsement procedures
.
Summary of Credit Policy Revisions and Documentation Reductions
As described in greater detail in Chapter 2 in this guide, borrowers
may be eligible for some or all of the reduced documentation and
credit policy revisions in the following categories, depending on the
risk class of the mortgage. Most of the credit policy revisions to
the underwriting requirements of the mortgage credit analysis
handbook and documentation reductions are available only on loans
scored as accept or approve.
For ease of reading, we have chosen to use "lender" in lieu of
"mortgagee" throughout this user guide. However, lender is to be
interpreted as a FHA-approved mortgagee as described in 24 CFR º
202.10.
CHAPTER 1
LOAN SUBMISSION REQUIREMENTS
The Loan Origination System (LOS) being used, as well as the AUS
vendor or platform, will determine the manner in which data are
entered into the AUS, including the field names, which may vary
across systems. The instructions below are designed to provide
lenders with basic information on FHA standards and definitions.
Please note that although all of the following products and programs
are eligible for risk assessment using FHA's TOTAL Mortgage
Scorecard, it is possible that not all are supported by the AUS.
Mortgage lenders will need to check the AUS vendor's user guide for
details. The AUS's proprietary user guide will provide the
requirements for data input specific to that AUS.
Property and Program Eligibility
To obtain a credit risk assessment from FHA's TOTAL Mortgage
Scorecard, the loan must meet the following FHA eligibility criteria:
* Loan Purpose
* Purchase Money Mortgage
* Construction-to-Permanent Mortgages
* Regular Refinance with Credit Qualifying
* Cash-Out Refinances up to 85 percent of the appraised value
* Streamline Refinance (both credit qualifying and non-credit
qualifying, provided sufficient data is entered and verified to
obtain a risk analysis)
* Credit Qualifying Assumptions
* FHA Insurance Product
* 203(b)---Standard FHA product for detached dwellings
* 203(h)---Mortgages for Disaster Victims
* 234(c)---Unit Mortgages in Condominium Projects
* 203(k)---Rehabilitation Mortgage Insurance
* 251---Adjustable Rate Mortgages (ARMs) on single family Detached
and Condominium Units
* Energy Efficient Mortgages (EEMs) (see instructions under "Income
and PITI Information," below)
* Section 247---Hawaiian Home Land mortgages
* Property Types
* Single family dwellings of 1- to 4-living units [Note: 3- and
4-unit properties have additional underwriting requirements as
described in Handbook HUD 4155.1 REV-5 which may or may not be
supported by the AUS]
* Manufactured homes meeting FHA's property requirements for Title II
mortgage insurance
* Units in Low- and High-Rise Condominium Projects [Note: Project
must be FHA approved or individual unit must be eligible using "spot
condo" processing]
| FHA Loan Programs |
This User Guide is designed to assist lenders using the Federal
Housing Administration's (FHA) Technology Open To Approved
Lenders (TOTAL) Mortgage Scorecard deployed in conjunction
with various automated underwriting systems (AUS).
FHA's TOTAL Mortgage Scorecard evaluates the overall credit
worthiness of the applicants based on a number of credit
variables and, when combined with the functionalities of the AUS,
indicates a recommended level of underwriting and
documentation to determine a loan's eligibility for insurance by
FHA.
Taken together, TOTAL and the AUS either conclude that the
borrowers' credit and capacity for repayment of the mortgage are
acceptable or will refer the loan application to a Direct
Endorsement (DE) underwriter for further consideration and
review. It is FHA's policy that no borrower be denied a
FHA-insured mortgage solely on the basis of a risk assessment
generated by the TOTAL mortgage scorecard.
Housing Administration's (FHA) Technology Open To Approved
Lenders (TOTAL) Mortgage Scorecard deployed in conjunction
with various automated underwriting systems (AUS).
FHA's TOTAL Mortgage Scorecard evaluates the overall credit
worthiness of the applicants based on a number of credit
variables and, when combined with the functionalities of the AUS,
indicates a recommended level of underwriting and
documentation to determine a loan's eligibility for insurance by
FHA.
Taken together, TOTAL and the AUS either conclude that the
borrowers' credit and capacity for repayment of the mortgage are
acceptable or will refer the loan application to a Direct
Endorsement (DE) underwriter for further consideration and
review. It is FHA's policy that no borrower be denied a
FHA-insured mortgage solely on the basis of a risk assessment
generated by the TOTAL mortgage scorecard.
FHA Score Card Guidelines
an accept or approve recommendation (competing AUSs may
use either term) need not be reviewed by a DE underwriter,
and neither the mortgage credit analysis worksheet nor the DE
Approval (HUD-92900-A, page 3) need indicate the individual
underwriter's Computerized Homes Underwriting Management
System (CHUMS) identification number.
Instead, these documents will show the identification number
assigned by FHA for its TOTAL Mortgage Scorecard and
provide feedback to the lender. A DE underwriter must
underwrite the appraisal according to standard FHA
requirements regardless of the mortgage credit risk
score determined by the scorecard.
Each AUS using FHA's Mortgage Scorecard produces a
document that provides feedback to the lender. The feedback
document upon which the lender makes its credit decision
(typically, the result from the last scoring event) must be
included in the binder submitted to FHA for insurance
purposes even if the loan application is referred to a
DE underwriter for manual underwriting.
It is to be placed on the right-hand side of the endorsement
binder, top sheets. Regardless of the risk assessment
provided, the lender remains accountable for compliance with
FHA eligibility requirements, as well as for any credit, capacity,
and documentation requirements not covered in this user
guide.
use either term) need not be reviewed by a DE underwriter,
and neither the mortgage credit analysis worksheet nor the DE
Approval (HUD-92900-A, page 3) need indicate the individual
underwriter's Computerized Homes Underwriting Management
System (CHUMS) identification number.
Instead, these documents will show the identification number
assigned by FHA for its TOTAL Mortgage Scorecard and
provide feedback to the lender. A DE underwriter must
underwrite the appraisal according to standard FHA
requirements regardless of the mortgage credit risk
score determined by the scorecard.
Each AUS using FHA's Mortgage Scorecard produces a
document that provides feedback to the lender. The feedback
document upon which the lender makes its credit decision
(typically, the result from the last scoring event) must be
included in the binder submitted to FHA for insurance
purposes even if the loan application is referred to a
DE underwriter for manual underwriting.
It is to be placed on the right-hand side of the endorsement
binder, top sheets. Regardless of the risk assessment
provided, the lender remains accountable for compliance with
FHA eligibility requirements, as well as for any credit, capacity,
and documentation requirements not covered in this user
guide.
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