Are you aware of what you are certifying to on an FHA loan transaction? Are you aware of the False Claims Act? Read on!
The False Claims Act is the federal government’s primary tool in combating fraud against the government. With respect to some recent cases involving mortgage lenders, the Department of Justice (DOJ) has asserted that certain lenders falsely certified that many FHA loan transactions had met HUD/FHA’s underwriting standards when, in fact, they were allegedly improperly underwritten.
A key document in making such certifications is Form HUD-92900-A (HUD/VA Addendum to Uniform Residential Loan Application). Interestingly enough, HUD had previously proposed some substantive changes to the Form HUD-92900-A in a May 15, 2015 Federal Register Notice and revisions have now been made and announced on September 1, 2015. The most noteworthy changes being proposed for the Form HUD-92900-A are as follows (Note: This is not an all-encompassing list):
Changes in the Lender/Mortgagee Certification
- Page 1, Part II – Lender/Mortgagee Certification – separate certifications are listed for the initial and the final Uniform Residential Loan Application (URLA). The certification for the final URLA reads as follows: “The information contained in the final URLA, which was signed by the Borrower at the time of settlement, was obtained by an employee of the undersigned lender/mortgagee or its duly authorized agent is to the best of lender/mortgagee’s knowledge true, complete and accurate as of the date verified by the lender/mortgagee.”
Changes to the Borrower’s Occupancy Certification
- Page 2, under the Borrower’s Certification – there are separate certifications listed for HUD/FHA transactions. It states “I, the Borrower or Co-Borrower will occupy the property within 60 days of signing the security instrument, and intend to continue occupancy for at least one year” or “I do not intend to occupy the property as my primary residence”.
Changes to the Direct Endorsement (DE) Underwriter’s Certification
- Page 3, for AUS cases rated as “Accept” or “Approve” – a new separate certification is required of the DE underwriter that states that they have “personally reviewed and underwritten the appraisal according to standard FHA requirements.” The DE underwriter’s signature and CHUMS ID number will be required to be provided under this new certification.
- Page 3, for AUS cases rated as “Refer” and were manually underwritten – a revised certification has been created which greatly expands on the scope of the DE underwriter’s review criteria. It states that “I have performed all Specific Underwriter Responsibilities for Underwriters and my underwriting of the borrower’s Credit and Debt, Income, Qualifying Ratios and Compensating Factors, if any, and the borrower’s DTI with Compensating Factors, if any, are within the parameters established by FHA and the borrower has assets to satisfy any required down payment and closing costs of this mortgage”. An additional certification is also contained in this Section which reads “I have verified the Mortgage Insurance Premium and Mortgage Amount are true and correct and this loan is in an amount that is permitted by FHA for this loan type, property type, and geographical area.” This certification also requires the DE Underwriter’s signature and CHUMS ID number.
Changes to the Borrower’s Blanket Certification
- Page 4, under the Borrower’s Certification – additional verbiage is added with respect to the source of funds shown on the settlement statement. The entire certification now reads as follows: “All charges and fees collected from me as shown in the settlement statement have been paid by my own funds, gift funds, or acceptable Down Payment Assistance program funds, and no charges have been or will be paid by me in respect to this transaction”.
- Page 4, under the Mortgagee’s Certification – an added certification reads as follows: “A Pre-Endorsement Review has been completed and revealed no deficiencies or defects in the documents listed at HUD Handbook 4000.1, II.A.7.b. That would render the loan ineligible for FHA insurance endorsement”.
Do you believe that the proposed revisions to the 92900-A Form are beneficial?
The draft version of the 92900-A Form can be obtained by clicking on this Form number HUD 92900-A
I would highly recommend that lenders and underwriters carefully read all of the certifications contained on the revised 92900-A Form. You need to thoroughly know what you are certifying – a word to the wise!