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As I have mentioned in previous Blog Posts, 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 of 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.
Between now and June 2015, it is my intent to point out some of the more noteworthy FHA underwriting policy & procedural changes that will be implemented in June 2015 so that lenders will not be blind-sided when these changes take effect. Although “Ignorance is Bliss” it is essential that lenders take note of these changes since HUD’s post-closing reviews will be focused on these items once they become effective.
Outlined below are some of these proposed changes:
- For all Earnest Money Deposits (EMDs) and/or recent deposits – in excess of 1% of the sales price – the source of such funds must be documented. The previous policy only required such documentation when these deposits exceeded 2% of the sales price.
- All loan documents must be no more than 120 days old as of the Disbursement Date. Previously, loan documents could be up to 180 days old if the loan involved new construction.
- Student loans deferred more than 12 months must now be counted towards recurring obligations. Previously, such debts were not counted as a recurring obligation.
- A loan secured by an interest in a timeshare must be considered as an installment loan. Previously, such loans were not treated as an installment loan.
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 is accessible for all to read.
Look for future Blog Posts outlining additional FHA policy changes.
The game is changing – you need to stay compliant!
