June 13, 2024

Underwriting Guideline Updates – FHA

Bulletin 2024-038 Underwriting Guideline Updates – FHA

Newrez LLC "Newrez" Approved Correspondent Clients; this announcement contains the following information:

 

  • Clarifications and/or corrections to the Newrez Guide as of June 27, 2024

 

Please use this announcement as guidance until all applicable underwriting guides are published.

 

FHA Update - Asset Requirements

 

FHA Handbook 4000.1 was released on May 5, 2024 with updates effective no later than August 19, 2024. All updates are being reviewed for release on July 30, 2024; however, the following updates are effective immediately.

 

Financial Institution Accounts

 

Updates have been completed to reflect the following:

 

  • Recently opened accounts or individual large deposits in excess of 50% of borrower’ s total monthly effective income will require an explanation and documentation for source of funds.
  • Deposits must be verified to be commensurate with the borrower’s income and savings history 

 

Gift Funds

 

Transfer of Gift Funds have been expanded to include acceptable evidence for receipt of the gift:

 

  1. For Gifts that will be verified prior to settlement, obtain one of the following:

    • the donor's bank statement showing the withdrawal and evidence of the deposit into the borrower's account; or
    • a copy of the donor’s canceled check and evidence of deposit into the Borrower’s account; or
    • a copy of the donor’s withdrawal receipt and evidence of deposit into the Borrower’s account; or
    • evidence of the electronic transfer of funds from the donor’s account to the Borrower’s account.
  1. For Gifts that will be verified at settlement, obtain one of the following evidencing payment to the settlement agent:
    • evidence of electronic transfer of funds from the donor’s account; or
    • bank certified check; or
    • cashier’s check; or
    • other official bank check.

     

Note:  Gift Funds received at Closing must be reflected on the Closing Disclosure (CD).

 

  1. For gifts of land, must obtain proof of ownership by the donor and evidence of the transfer of title to the borrower.

 

Complete guidelines can be found in the FHA Underwriting Guide, Chapter 2G,  Assets, in following  sections:

 

  • 4(a) Financial Institution Accounts
  • 4(i) Gift Funds