Module 4: Manual Underwriting of the Borrower
Single Family Housing Policy Handbook 4000.1 - Title II Insured Housing Program Forward Mortgages Origination through Post-Closing/Endorsement
Module 4: Manual Underwriting of the Borrower
The information in this document is current as of the Last Update date noted above. This document does not establish or modify the policy contained in FHA's Handbooks and Mortgagee Letters in any way.
As of June 30, 2016
Presented by: Eric McDowel, Senior Underwriter John Phillips, Branch Chief Philadelphia Homeownership Center
FHA's Office of Single Family Housing Training Module
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Introduction
FHA's Office of Single Family Housing Training Module
The Manual Underwriting of the Borrower section of the
Handbook provides Mortgagees FHA's policy requirements to
determine a borrower's ability to obtain FHA insured single-
family financing considering:
? Creditworthiness; ? Effective income; and
Income
? Assets.
Credit
Assets
Manual Underwriting
Borrower
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FHA's Office of Single Family Housing Training Module
Manual Underwriting of the Borrower
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FHA's Office of Single Family Housing Training Module
Manual Underwriting Requirements
The Mortgagee must manually underwrite those applications where: ? TOTAL issues a Refer; ? The application was downgraded to a manual underwrite; or ? FHA programs requires manual underwriting for the
application.
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FHA's Office of Single Family Housing Training Module
Accept Risk Classifications Requiring a Downgrade to Manual Underwriting
A mortgage that received an Accept recommendation must be downgraded if: ? The mortgage file contains information or documentation that
cannot be entered into, or evaluated by TOTAL Mortgage Scorecard; ? Additional information, not considered in the AUS recommendation, affects the overall insurability of the Mortgage;
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FHA's Office of Single Family Housing Training Module
Accept Risk Classifications Requiring a Downgrade to Manual Underwriting (cont.)
? The Borrower has $1,000 or more collectively in Disputed Derogatory Credit Accounts;
? The case number assignment date is within three years of any of the following events:
? The date of the transfer of title through a Pre-Foreclosure Sale (Short Sale);
? The date of the transfer of title through a foreclosure sale; ? The date of the transfer of title through a Deed-in-Lieu (DIL) of
foreclosure;
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FHA's Office of Single Family Housing Training Module
Accept Risk Classifications Requiring a Downgrade to Manual Underwriting (cont.)
? The date of the Borrower's bankruptcy discharge as reflected on bankruptcy documents is within two years from the date of case number assignment;
? The Mortgage Payment history requires a downgrade as defined in Housing Obligations/Mortgage Payment History;
? The Borrower has undisclosed mortgage debt; or ? Business income shows a greater than 20 percent decline over
the analysis period.
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