The StoneHill Group continually monitors the mortgage industry for changes that impact our clients. Here are the most recent Agency updates.

June 26, 2020

Temporary Waiver of QC Requirements for Early Payment Defaults

Today, June 22, 2020, FHA issued a temporary waiver of its Single Family Housing Policy Handbook 4000.1 (SF Handbook) to temporarily suspend the requirement that mortgagees select and review all Early Payment Defaults (EPDs) on a monthly basis. An EPD refers to all mortgages that become 60-days delinquent within the first six payments.

As a result of the COVID-19 National Emergency, FHA has observed a significant increase in EPDs nationwide. Most are likely caused by loss of employment and/or income due to the public health emergency, and not the result of non-compliance with FHA Single Family origination and underwriting requirements. Therefore, FHA is providing mortgagees with flexibility by temporarily waiving its requirements found in SF Handbook, Sections V.A.3.a.i(C) and V.A.3.a.iv(B)(2).

With this waiver, mortgagees are not required to conduct quality control (QC) reviews of EPDs that would have been selected as part of a mortgagee’s May, June, or July 2020 QC selections. Mortgagees must continue to meet all other loan-level QC requirements in SF Handbook, Section V.A.3. For example, mortgagees must select FHA-insured loans for review via random and discretionary sampling methods that meet the conditions described in Section V.A.3.a.iv. These random and discretionary samples may include EPDs.

View the temporary waiver of QC requirements for Early Payment Defaults on the Waivers page at: https://www.hud.gov/program_offices/administration/hudclips/waivers/

 

Temporary Partial Waiver of QC Requirements for Field Review Appraisals

Today, FHA issued a temporary partial waiver of its Single Family Housing Policy Handbook 4000.1 (SF Handbook) to provide mortgagees with flexibility related to quality control (QC) field reviews of appraisals.

Considering the social distancing requirements in place in many areas of the country, mortgagees may be unable to conduct targeted field reviews of appraisals on 10 percent of FHA-insured mortgages selected for the monthly post-closing QC sample. Therefore, FHA is providing mortgagees with flexibility by temporarily waiving part of its requirements found in SF Handbook, Section V.A.3.c.ii(C)(1)(b).

With this waiver, mortgagees are permitted to use third-party tools as an alternative to field reviews of appraisals. Mortgagees must continue to meet all other appraisal QC requirements in SF Handbook, Section V.A.3.c.ii(C). For example, mortgagees must conduct desk reviews of appraisals following the standards described in Section V.A.3.c.ii(C)(1)(a).

This temporary partial waiver applies to QC reviews currently in process and for cases selected as part of a mortgagee’s May, June, or July 2020 QC selections.

View the temporary partial waiver of QC requirements for field reviews of appraisals on the Waivers page at: https://www.hud.gov/program_offices/administration/hudclips/waivers/