New FHA Updates and Handbook Additions

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Several months ago HUD/FHA released a draft copy of its “Origination through Post-Closing Endorsement” Handbook (4000.1) on its website.  Most noteworthy is the fact that the policy & procedural changes that are being implemented by HUD/FHA via this Handbook are scheduled to be effective as of June 15, 2015 – which is now less than 3 months away.

Also, on March 18, 2015 HUD/FHA released updates and additional sections to this Handbook that will impact appraisers and 203(k) consultants, as well as Quality Control (QC) operations for lenders.  These policy and procedural changes will also become effective on June 15, 2015.

Examples of some of the substantive changes are as follows:

1. lenders will now be required to perform pre-closing QC review on 10% or less on the FHA loans they are originating (up until now HUD/FHA only recommended that such reviews be processed)
2. HUD/FHA has listed those items that must be reviewed in both a pre-closing and post-closing QC review
3. appraisers will now have to submit many additional photographs of the subject property (including interior photos) as part of their appraisal report.

It is highly recommended that all those entities that are currently involved with FHA financing (lenders, brokers, appraisers, consultants, etc.) access the www.hud.gov website.

Then search for “HUDCLIPS” and look for Housing Handbook 4000.1.  The new updates and sections have just been added to this document and are accessible for all to read.  On their website HUD/FHA has posted details as to their planned industry briefings on these changes – with the next conference call scheduled for March 26, 2015.

You may be quite surprised at the number of proposed changes being implemented in less than 3 months’ time!

Be Ready – You can’t say you were not provided a heads-up.

About the Author

Gerry Glavey

Gerard (Gerry) Glavey is Senior Vice President / Chief Credit Officer for LoanLogics. Gerry has decades of experience working in residential mortgage credit and compliance and brings insights that few in the industry can match. In his role, he develops new services and provides support for all post close quality control and quality assurance, pre-close quality control, due diligence services, and document processing services. He spent 37 years with the US Department of Housing and Urban Development, where most recently he was the Director, Processing and Underwriting Division for the Home Ownership Center (HOC) in Philadelphia. In this capacity, Mr. Glavey was responsible for the administration of all HUD/FHA Single Family Loan Origination activities, including underwriting, appraisal and endorsement for the 16 state jurisdiction of this HOC.