FHA Single Family Housing Policy Handbook

[Pages:12]FHA Single Family Housing Policy Handbook

(SF Handbook; HUD Handbook 4000.1)

Frequently Asked Questions

Last Updated: August 26, 2015

SF Handbook General

Q1: Where is the official version of the SF Handbook published? A1: As of May 18, 2015, the official version of the SF Handbook (HUD Handbook 4000.1) is published in an online, electronic format on the AllRegs? electronic policy platform. Access to the online SF Handbook is available for free from the link on HUD's Client Information Policy Systems (HUDCLIPS) web page at: .

FHA also maintains a portable document format (PDF) version of the SF Handbook on its HUDCLIPS web page.

Q2: What is the effective date for the SF Handbook's published sections? A2: The effective date for implementation of the new and/or revised policies and processes contained within published SF Handbook are as noted below.

The following previously published sections are effective on September 14, 2015: x Doing Business with FHA--Lenders and Mortgagees x Doing Business with FHA--Other Participants - Appraiser x Quality Control, Oversight and Compliance--Lenders and Mortgagees (Except for Section V.A.3.c.i ? Origination and Underwriting Loan File Compliance Review ? Minimum Requirements which is effective for case numbers assigned on or after September 14, 2015)

The majority of the Origination through Post-Closing/Endorsement for Title II Forward Mortgages section of the SF Handbook is effective for case numbers assigned on or after September 14, 2015.

The following sections become effective for case numbers assigned on or after March 14, 2016: x Doing Business with FHA--Other Participants ? 203 (k) Consultant and Direct Endorsement (DE) Underwriter x Quality Control, Oversight and Compliance--Other Participants - 203 (k) Consultant and Direct Endorsement (DE) Underwriter

The policies in both the Doing Business with FHA and Quality Control, Oversight and Compliance--Other Participants ? Nonprofit and Governmental Entity subsections become effective on March 14, 2016.

The HUD Real Estate Owned (REO) Purchasing section, which was announced via Mortgagee Letter 1517, becomes effective as follow:

x The elimination of use of the list price of the HUD Real Estate Owned property in determining the maximum mortgage amount is effective for endorsement on or after September 14, 2015, including pipeline applications.

x The revision to Section II.A.8.a.ix and the revisions to the definition of Adjusted As-Is Value and As-Is Property Value are effective for case numbers assigned on or after September 14, 2015.

x Section II.A.8.o, HUD Real Estate Owned Purchasing, Section II.B.12.e.i, Definition and Section II.B.12.e.iv, Appraisals for HUD Real Estate Owned Properties are effective for case numbers assigned on or after March 14, 2016.

The policies in the Servicing and Loss Mitigation section and the Servicer Tier Ranking System II (TRS II) become effective on March 14, 2016, except the Default Servicing policies in Section III.A.2, which become effective for all FHA-insured mortgages in default on or after March 14, 2016.

Q3: Which Mortgagee Letters no longer apply as of the effective dates? A3: Please see the March 18, 2015, June 24, 2015, August 14, 2015, and August 26, 2015 Transmittals, included in the online SF Handbook posted on HUDCLIPS, for a detailed list of the existing Single Family Handbooks, Mortgagee Letters, and other policy documents that will be superseded in whole or in part on the effective dates of the SF Handbook. Please note that all applicable law and existing Single Family Handbooks, Mortgagee Letters, and policy documents continue to apply until the effective date.

Q4: If mortgagees are ready to implement policies now, will they be allowed to use the SF Handbook policies? A4: No. Mortgagees must use existing FHA policy until the new SF Handbook becomes effective. The new SF Handbook is available online to help mortgagees prepare, but existing guidance remains in place until the effective dates of the various sections and subsections, as noted in the online SF Handbook within each section/subsection, and in the SF Handbook Transmittals published to date.

Q5: How will FHA update the online SF Handbook? A5: FHA will regularly update online SF Handbook policies by section or subsection as needed, and usually following an announcement via FHA's standard communications vehicles, such as a Mortgagee Letter. Updates and additions incorporated into the online SF Handbook will be clearly marked using a system of color-coded notations.

Q6: Will FHA maintain the portable document format (PDF) version of the SF Handbook? A6: FHA will maintain the PDF version of the SF Handbook on its HUDCLIPS web page until at least September 11, 2015.

Doing Business and Oversight and Compliance

Q7: What is the effective date for the SF Handbook Doing Business with FHA and Quality Control, Oversight and Compliance sections?

SF Handbook Frequently Asked Questions

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A7: The SF Handbook Doing Business with FHA--Lenders and Mortgagees (Doing Business) and Quality Control, Oversight and Compliance--Lenders and Mortgagees (Oversight and Compliance) sections and the Doing Business with FHA--Other Participants in FHA Transactions ? Appraiser will become effective on September 14, 2015 with one exception. As noted in the April 30, 2015 SF Handbook Transmittal, Section V.A.3.c.i-Origination and Underwriting Loan File Compliance Review-Minimum Requirements in the Quality Control section-is effective for case numbers assigned on or after September 14, 2015. All applicable law and existing Single Family Handbooks, Mortgagee Letters, and policy documents continue to apply until the Doing Business and Oversight and Compliance sections become effective on September 14, 2015.

Q8: Why are certain Title I-related sections in the Doing Business and Oversight and Compliance sections listed as "Reserved for Future Use"? A8: The special requirements for Title I Manufactured Housing Loan Direct Endorsement Authority, Title I Quality Control, Title I Lender Monitoring Reviews, and Title I Loan Level Reviews are under development along with the Title I programs policy document, and will be posted for feedback at a later date. All applicable law and existing Single Family Handbooks, Mortgagee Letters, and policy documents continue to apply until these subsections are published in final form and become effective at a later date.

Doing Business and Quality Control, Oversight and Compliance--Other Participants in FHA Transactions

Q9: Why is FHA just now publishing SF Handbook Doing Business and Quality Control, Oversight and Compliance--Other Participants subsections? A9: The special requirements for stakeholders, such as 203(k) Consultants, Direct Endorsement (DE) underwriters, and Nonprofits and Governmental Entities, were developed separately from those included in the larger Doing Business with FHA and Quality Control, Oversight and Compliance sections. The aforementioned Doing Business with FHA--Other Participants and Quality Control, Oversight and Compliance--Other Participants subsections were posted in draft form for feedback in January 2015, with the feedback period ending on February 22, 2015. After assessing the feedback received, FHA has now finalized these subsections for publication on August 26, 2015. For 203(k) Consultants and DE Underwriters, these SF Handbook policies become effective for case numbers assigned on or after March 14, 2016. Policies related to Nonprofits and Governmental Entities become effective on March 14, 2016. Until the aforementioned policies become effective, all related applicable law and existing Single Family Handbooks, Mortgagee Letters, and policy documents continue to apply.

Note, however, that the Doing Business with FHA and Quality Control, Oversight and Compliance--Other Participants in FHA Transactions - Appraiser subsections were developed separately and published on March 18, 2015. The policies contained in these subsections will become effective on September 14, 2015.

Q10: Are there policy changes in the SF Handbook Doing Business and Quality Control, Oversight and Compliance--Other Participants sections?

SF Handbook Frequently Asked Questions

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A10: Yes. There are policy and other changes in the Doing Business with FHA and Quality Control, Oversight and Compliance--Other Participants ? 203(k) Consultant, Direct Endorsement (DE) Underwriter, and Nonprofit and Governmental Entity subsections that published on August 26, 2015. Some are changes in the various subsections are to actual FHA policies, while others are to existing policy language and terminology so that its tone and style is consistent with other previously published sections of the SF Handbook.

Q11: Will FHA publish a "Highlights of Changes" document that summarizes the policy changes contained in the Doing Business and Quality Control, Oversight and Compliance--Other Participants subsections? A11: No. Specific policy changes must be read and understood within the full context of the published sections.

Q12: Can I still submit feedback on the draft versions of the Doing Business and Quality Control, Oversight and Compliance sections? A12: No; these sections are no longer drafts; they are now published policy. On August 26, 2015, FHA published the Doing Business and Oversight and Compliance-- Other Participants ? 203(k) Consultant, Direct Endorsement (DE) Underwriter, and Nonprofit and Governmental Entity subsections. These subsections are now incorporated within the larger Doing Business with FHA and Quality Control, Oversight and Compliance sections of HUD Handbook 4000.1.

Origination through Endorsement General

Q13: What is the effective date for the SF Handbook Origination through Post-Closing/Endorsement for Title II Forward Mortgages section? A13: The SF Handbook Origination through Post-Closing/Endorsement for Title II Forward Mortgages (Origination through Endorsement) section becomes effective for FHA case numbers assigned on or after September 14, 2015. All applicable existing Single Family Handbooks, Mortgagee Letters and policy documents continue to apply until Origination through Endorsement becomes effective for FHA case numbers assigned on or after September 14, 2015.

Q14: Are there policy changes in the SF Handbook Origination through Endorsement section? A14: Yes. The Origination through Endorsement section of the SF Handbook, which published on September 30, 2014, contained both changes to FHA policies, and revisions to existing policy language. The updates and additions to this section - subsequently published also contained policy changes and revisions that were implemented by Mortgagee Letters between September 30, 2014 and August 26, 2015.

Q15: Can I still submit feedback on the policies contained in the draft Origination through Endorsement section posted on the FHA's Drafting Table web page? A15: No. The official feedback period is closed.

SF Handbook Frequently Asked Questions

Last Updated: August 26, 2015

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Q16: Why are there no Condominium Project Approval requirements in Origination through Endorsement? A16: FHA's Condominium Project Approval requirements will go through a formal rule making process before they are published in the Origination through Endorsement section. Our existing Condominium Project Approval requirements located in Mortgagee Letter 2012-18, and the Condominium Project Approval and Processing Guide attached to Mortgagee Letter 2011-22 continue to apply.

Q17: How do I know what's changed in Origination through Endorsement? A17: Policy changes and revisions made to Origination through Endorsement are noted in the SF Handbook Transmittals, which are available in the online SF Handbook (HUD Handbook 4000.1).

Q18: Were there changes to the Streamline Refinance product as a result of the Notice published in the Federal Register in October 2014? A18: A final effective date for FHA's Streamline Refinance requirements, which, after review of the comments received in response to the Federal Register notice soliciting comments on this section, remain unchanged from those published in the Origination through Endorsement section on September 30, 2014.

Q19: Why do you say that the Origination through Endorsement section is "essentially" complete? A19: The Condominium Project Approval section of Origination through Endorsement must go through formal rule-making before it can be completed and published. The HUD REO Purchasing section is still in development. Despite these yet-to-be published components, mortgagees and other stakeholders now have a consolidated source of policy available for origination through obtaining an FHA insurance endorsement for essentially all FHA Title II forward mortgage products and programs.

Q20: Why are there links in Origination through Endorsement that do not work? A20: There are links in the Origination through Endorsement section of the online SF Handbook that are inactive at this time. These links are placeholders and will become live when the connecting sections of the SF Handbook are published.

Q21: Which Mortgagee Letters no longer apply on the Origination through Endorsement effective date? A21: On March 18, 2015, and on August 14, 2015, FHA published a list of Single Family Mortgagee Letters and Handbooks that will be superseded in whole or in part by the Origination through Endorsement section when the section becomes effective. On April 30, 2015, FHA extended the effective date for the SF Handbook to September 14, 2015, and thus, all policy documents on this list will now be superseded as of the new, September 14, 2015 effective date. Please note that all applicable law and Single Family Handbooks, Mortgagee Letters and policy documents continue to apply until Origination through Endorsement becomes effective for FHA case numbers assigned on and after September 14, 2015.

Q22: After the September 14, 2015 effective date for Origination through Endorsement, will I still have access to superseded Mortgagee Letters and Handbooks? A22: Yes. FHA is working on its system for marking and making available its superseded Mortgagee Letters and other policy documents to launch on or shortly after the Origination through Endorsement September 14, 2015 effective date. FHA understands that these documents must remain available to mortgagees and other stakeholders for a variety of purposes. All Mortgagee Letters and other policy

SF Handbook Frequently Asked Questions

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documents to be superseded by the SF Handbook on its effective date are still posted on HUDCLIPS today.

Q23: When will the FHA Resource Center's Knowledge Base be updated to reflect the policies contained in the Origination through Endorsement section? A23: FHA intends to have its Resource Center online Knowledge Base updated to reflect Origination through Endorsement policy information on September 14, 2015. FHA has published a preview of detailed Frequently Asked Questions that will be uploaded to the online Knowledge Base on September 14, 2015. These detailed FAQs can be previewed on FHA's SF Handbook Information Page at: .

Q24: Will FHA continue to issue policy revisions for Origination through Endorsement before the September 14, 2015 effective date? A24: FHA may issue additional policy changes that will revise content in the Origination through Endorsement section. In addition, policy and wording changes that FHA intends to make in the future, and that have not yet been incorporated into the online SF Handbook, are published on FHA's SF Handbook Information page on at: .

Q25: Will FHA publish a "Highlights of Changes" document that summarizes the policy changes contained in Origination through Endorsement? A25: No. The Origination through Endorsement section is a significant change in how FHA presents policies and requirements. Specific policy changes must be read and understood within the full context of the section. FHA has posted a series of pre-recorded training sessions for stakeholders. These selfpaced pre-recorded sessions are available 24/7 on , and provide detailed and comprehensive reviews of the policies contained in each section of Origination through Endorsement. Stakeholders can access the pre-recorded modules at: .

Section 203(k) Rehabilitation Mortgage Insurance Program

Q26: What changed from the posted to the published version of the 203(K) product section? A26: There are few changes to the published version of FHA's 203(k) Rehabilitation Mortgage section from the draft version posted for feedback in August 2014 to the completed version published on March 18, 2015. Most, but not all, changes are to language to conform to the format and style of the SF Handbook, and to ensure a clear and consistent presentation of policy.

Q27: FHA proposed several policy changes in the draft 203(k) product section. Have these proposals been incorporated into the published version? A27: Yes. With one notable exception, FHA incorporated all of its proposed 203(k) product changes from the draft section into the section that published on March 18, 2015 and that is now in the online SF Handbook. The exception is the requirement to obtain both an "as-is" and "after improved" appraisal on 203(k) mortgages, which FHA proposed in the draft version of this section, but did not adopt in the published section.

Q28: What are the specific policy changes included in the published 203(k) product section?

SF Handbook Frequently Asked Questions

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A28: FHA is not publishing a detailed document of specific changes to the 203(k) product section, as it is important that mortgagees and 203(k) consultants read the section in its entirety to understand the policy within the context of the entire section and the larger Origination through Endorsement section. However, mortgagees should note several key changes in the section in particular:

x The Streamlined 203(k) Program name has been changed to its new name, Limited 203(k) Program.

x The establishment of a loan-to-value (LTV) ratio calculation of Mortgage Insurance Premiums (MIP) that is separate and distinct from the LTV ratio calculation for the maximum mortgage amount

x Revised appraisal requirements for properties that have sold in the previous 12 months. x Elimination of the Form HUD 92700, Maximum Mortgage Worksheet, that was highlighted in

the draft section posted for feedback. Technology is currently in development to automate the maximum mortgage calculation and make it available online as well as in FHA Connection. FHA will announce when this functionality is available.

In addition, mortgagees should note that until FHA makes the maximum mortgage calculation functionality available in FHAC, mortgagees must detail the data delivery requirements in SF Handbook 8.a.xvi on the form HUD-92900-LT, or include the applicable 203(k) Maximum Mortgage Calculation Worksheet published on FHA's SF Handbook List of Linked References page.

FHA will announce the availability of the FHAC 203(k) data delivery functionality when it becomes available, with a future effective date that will provide significant lead time for mortgagees to adopt its use before the mandatory effective date.

Mortgagees, FHA-approved 203(k) Consultants and other stakeholders are encouraged to view FHA's self-paced, recorded Origination through Endorsement training modules. These training modules provide greater detail on FHA's 203(k) program and Consultant policies. These modules are available at: .

Q29: What is the effective date for the 203(k) policies contained in the 203(k) product section published on March 18, 2015? A29: The published 203(k) policies are effective for FHA case numbers assigned on and after September 14, 2015. This is the same effective date, extended from its original June 15, 2015 date, as the rest of the policies contained in the larger online SF Handbook Origination through Endorsement section.

Q30: Must mortgagees continue to use Form HUD 92700, Maximum Mortgage Worksheet, until FHA Connection is updated with the automated calculation? A30: Effective for FHA case numbers assigned on or after September 14, 2015, the 203(k) section of the SF Handbook's Origination through Endorsement section contains the policy requirements for the calculation of the maximum mortgage amount. Mortgagees will not be required to complete Form HUD 92700, but:

x Must calculate the maximum mortgage amount in accordance with the requirements in the SF Handbook.

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x Detail the data delivery requirements in SF Handbook 8.a.xvi on the form HUD-92900-LT, or include the applicable 203(k) Maximum Mortgage Calculation Worksheet accessible from FHA's SF Handbook List of Linked References page until automated functionality is available in FHA Connection.

Q31: Are there policy changes for 203(k) Consultants? A31: FHA revised the 203(k) Consultant section of Origination through Endorsement to conform language to the style of the larger SF Handbook, and for consistency and clarity of intent. These changes are not intended to be a departure from 203(k) Consultant requirements in place today.

FHA-approved 203(k) Consultants are encouraged to view FHA's self-paced, recorded Origination through Endorsement training modules. These training modules provide greater detail on FHA's 203(k) program and Consultant policies. These modules are available at: .

Q32: Do the 203(k) Consultant policies impact a consultant's ability to maintain 203(k) Consultant Roster eligibility? A32: The 203(k) Consultant policies published on March 18, 2015 are for consultant actions required for the origination and processing of a 203(k) Rehabilitation Mortgage. This section does not cover 203(k) Roster eligibility requirements. 203(k) Consultant Roster eligibility requirements are still in draft form and will be published in the future in the Other Participants section of the SF Handbook's Doing Business with FHA section. All applicable law and existing Single Family Handbooks, Mortgagee Letters, and policy documents continue to apply.

Q33: Has the "203(k) Handbook 4240.4" also been updated? A33: No. FHA's Single Family Handbook 4240.4, 203(k) Rehabilitation Home Mortgage Insurance, will be completely superseded by the SF Handbook 203(k) product and consultant requirements, when these requirements become effective for FHA case numbers assigned on and after September 14, 2015.

Q34: Has FHA changed its 203(k) Consultant fees with the publication of the 203(k) Consultant section? A34: The 203(k) Consultant fees in the published version of the 203(k) Consultant section remain unchanged from those currently in place. However, FHA intends to solicit public comment on its existing 203(k) Consultant fees in the near future.

Appraiser & Property Requirements/Data Delivery Guide

Q35: FHA proposed several policy changes in the draft Appraiser and Property Requirements section. Have these proposals been incorporated into the published version? A35: Yes. The published version of the Appraiser and Property Requirements for Title II Forward and Reverse Mortgages (Appraiser and Property Requirements) section includes the revisions and clarifications put forth in the draft section. This includes, but is not limited to, the following key policy revisions and clarifications: x Properties with a Legal Non-Conforming Use: requiring the appraiser to comment if improvements

can be rebuilt by right. x Accessory Dwelling Units: emphasizing Highest and Best Use to determine property type of

classification.

SF Handbook Frequently Asked Questions

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