Bulletin 2022-013 FHA Underwriting Guide Updates

New Construction Required Documentation
Chapter 2D Property Types

In the absence of such ICC certified RCI or CI, obtain a final inspection performed by a disinterested third party, who is a registered architect or a structural engineer and has met the licensing and bonding requirements of the state in which the property is located.

In the absence of such ICC certified RCI or CI, obtain a final inspection performed by a disinterested third party, who is a registered architect or a structural engineer, or a qualified trades person or contractor and has met the licensing and bonding requirements of the state in which the property is located

Eligible Property Types for New Construction
Chapter 2D Property Types

Silent

Added site built home and condo units as eligible for new construction

Downgrade to Manual Underwriting

Chapter 2E Underwriting

The loan must be downgraded and manually underwritten for any loan receiving an Accept recommendation if any of the following exist:

• Mortgage Payment History for any mortgage trade line reported on the credit report, during the most recent 12 months, that reflects:
  • Purchase and No Cash-out Refinance
    • 3x30; or
    • 1x60 and 1x30; or
    • 1x90; or
    • That the borrower has made less than three (3) consecutive payments since completion of a mortgage forbearance plan.

The loan must be downgraded and manually underwritten for any loan receiving an Accept recommendation if any of the following exist:

• Mortgage Payment History for any mortgage trade line reported on the credit report, during the most recent 12 months, that reflects:
  • Purchase and No Cash-out Refinance
    • 3x30; or
    • 1x60 and 1x30; or
    • 1x90; or
    • That the borrower has made less than 12 consecutive payments since completion of a mortgage forbearance plan.

Waiting Period Requirements
Chapter 2F Credit

Silent

Added deed-in-lieu definition

Sweat Equity
Chapter 2G Assets

Not allowed

Allowed

Court-Ordered Assignment of Debt
Chapter 2H Liabilities and Debt Ratios

When the borrower has an outstanding debt that was assigned to another party by a court order (e.g., divorce decree or separation agreement), and the creditor does not release the borrower from liability, the borrower has a contingent liability that must be included in the DTI ratio unless the divorce decree shows the ordering of the ex-spouse to make the payments.

When the borrower has an outstanding debt that was assigned to another party by a court order (e.g., divorce decree or separation agreement), and the creditor does not release the borrower from liability, the borrower has a contingent liability that must be included in the DTI ratio unless the divorce decree shows the ordering of the ex-spouse to make the payments. Evidence that the legally obligated party has made 12 months timely payments is not required.

A copy of the divorced decree or other court order ordering the spouse or other legally obligated party to make payments is required.

Allowable Age of Individual Income Tax Returns
Chapter 2I Employment and Income

Per FHA guidelines

Tables updated with current dates

Government Shutdown
Chapter 2I Employment and Income

Silent

For federal, state, tribal or local government employees temporarily out of work due to government shutdown or other similar, temporary events (where lost income is anticipated to be recovered), income preceding the shutdown can be considered effective income.

Housing Choice Vouchers Homeownership Program (Section 8)
Chapter 2I Employment and Income

Income may not be grossed up

Income may be grossed up

Changing Markets
Chapter 2J Appraisal

A minimum of two (2) active listings or pending sales on the SCA Grid (in addition to at least three (3) settled sales).

The appraiser must include an absorption rate analysis, at least two (2) comparable sales that closed within 90 days prior to the effective date of the appraisal, a minimum of two (2) active listings or pending sales on the SCA Grid (in addition to at least three (3) settled sales). If the appraiser cannot comply with these requirements due to a lack of market data, a detailed explanation is required to support the market trend conclusion and include all data and analysis used to identify the current forecasted market.

Leasehold Interest
Chapter 2J Appraisal

Calculation of the Leasehold Table

Table removed

Special Flood Hazard Areas Terminology Updated
Chapter 2J Appraisal

A residential building and related improvements to the property are located within SFHA Zone A, a Special Flood Zone Area, or Zone V, a Coastal Area, and insurance under the National Flood Insurance Program (NFIP) is not available in the community

A residential building and related improvements to the property are located within SFHA Zone A, a Special Flood Zone Area, or Zone V, a Coastal High Hazard Area, and insurance under the National Flood Insurance Program (NFIP) is not available in the community