If you have been reading the Blog Posts and Newsletters being generated by LoanLogics in the past few months – you are aware of the many underwriting policy changes being implemented by HUD/FHA when their 4000.1 Handbook becomes effective. Most portions of this Handbook are scheduled to become effective for case number assignments on and after September 14, 2015.
One of the more controversial new requirements involves the processing of re-verifications (income, employment, assets, etc.) on pre-closing cases.
HUD is now mandating that lenders begin processing pre-closing reviews on 10% or less of their monthly Quality Control reviews. Previously, HUD only recommended that lenders conduct such reviews.
As part of the Pre-Closing review process, HUD had initially stated that re-verifications should be processed on all pre-closing cases. Mortgage lenders expressed great concern over this new requirement as it would certainly add processing time for cases subjected to a pre-closing review.
On August 14, 2015, HUD published a revised draft 4000.1 Handbook which effectively removed the re-verification requirement for pre-closing cases (see page #755 of the 4000.1 revised Handbook). Also, HUD removed the requirement that a second full RMCR credit report be obtained from a different credit source as part of a Quality Control review.
To obtain a listing of all of the recent revisions made to the draft Handbook – go to the www.fha.gov website and type “4000.1 Handbook” in the Search box. Click on this Handbook & then look for the Transmittal Page contained at the beginning of this document.
There is less than 4 weeks remaining before the implementation date of most portions of this Handbook – better start reading it!