The Federal Housing Agency (“FHA”) recently announced updates to the Single Family Housing Policy Handbook 4000.1 in FHA Info #21-90. The updates contain revisions to Sections I, II, III, IV, Appendix 7.0, and the Claims Filing Technical Guide. Notable changes include:
- Section I.A.5. addition of Test Case definition.
- Section I.A.5. addition of post approval requirement. Mortgagee approved for lender insurance authority must maintain the Mortgagee’s lender insurance contact information in FHAC.
- Section I.B.4. addition of requirement for HUD-approved nonprofit to obtain credit qualification from a Mortgagee for each Mortgage originated, and each Mortgagee must be underwritten in accordance with nonprofit underwriting guidance.
- Section I.B.4. required documentation. The Affordable Housing Program Plus (AHHP) must demonstrate the ability of a nonprofit to perform throughout the geographic area that it operates in.
- Section II.A.1. addition under Appraiser Independence. The Mortgagee or any third party specifically authorized by the Mortgagee is responsible for selecting, retaining, and providing for payment of all compensation to the Appraiser. Appraiser may not be selected by a mortgage broker.
- Section II.A.1. removed text that non-U.S. citizens without lawful residency are not eligible for FHA-insured mortgages.
- Section II.A.4. addition of definition for “Deed in Lieu.”
- Section II.A.4. addition regarding contingent liability. When a contingent liability is created by a divorce decree or court order, evidence that the other legally obligated party has made 12 months of timely payments is not required.
- Section II.A.4. addition regarding effective income. For federal, state, tribal, or local government employees temporarily out of work due to a government shutdown or other similar, temporary event (where lost income is anticipated to be recovered), income preceding the shutdown can be considered effective income.
- Section II.A.5. addition of definition of “Deed in Lieu (DIL) of Foreclosure”.
- Section II.A.5. deletion under required documentation for borrowers who hold deposit account with non-Borrowers.
- Section II.A.5. addition of standards and required documentation for Energy Efficient Homes.
- Section II.A.7. updates to Assembly of Case Binder for Electronic Submission
- Section II.A.8. updates to structure standards under 203(k) Rehabilitation Mortgage Insurance Program and deletion of some property types that may be financed.
- Section II.A.8. updates to definitions under Net Tangible Benefit of Streamline Refinances
- Section II.D.4. updates to required analysis and reporting for appraisers, and removal of leasehold interest calculation.
- Section III.A.2. updates to Loss Mitigation for Borrowers Affected by the COVID-19 National Emergency sections including required documentation, definitions, and reporting.
- Section IV.A.1. deletion under claims submission process for providing borrower’s social security number.
Handbook updates were published on October 26, 2021. Changes in Section II.A may be implemented immediately but are mandatory for case numbers assigned on or after January 24, 2022. All other changes may be implemented now but are mandatory as of January 24, 2022.