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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