FHA is tightening the TOTAL Scorecard (HUD’s risk assessment evaluation accessed by DU or LP) as a response to the concerns with mortgages with higher-risk characteristics, particularly when layering of risk is present. When updated, Users submitting mortgages with case numbers assigned on or after March 18, 2019, to the TOTAL Mortgage Scorecard via an automated underwriting system (DU or LPA) may receive feedback results for certain mortgages indicating that they must be manually underwritten.
This is very significant for us, especially for those of you who have pre-approved borrowers shopping or TBD decisioned loans, which won’t have case numbers assigned yet (remember, a case # can only be assigned once there is an active application).
If you re-run your AUS and your loan is not subject to a manual underwrite, please review your file to make sure the credit history will qualify, letters of explanation are provided by the borrower for credit or ability to repay issues (recent derogatory, NSFs on bank statements) the ratios are still acceptable per FHA’s manual underwriting requirements, and compensating factors are included with file submissions to underwriting.
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