InfoBytes Blog
FHA updates manual underwriting requirements for single-family mortgages
On March 14, the FHA announced updates to its manual underwriting requirements for single-family mortgages with credit scores under 620 and debt-to-income ratios greater than 43 percent. The updates to the Technology Open to Approved Lenders (TOTAL) Mortgage Scorecard will apply to mortgages with FHA case numbers assigned on or after March 18. This announcement reverses a decision made in August 2016 to remove a manual underwriting rule from the TOTAL Mortgage Scorecard, which the FHA claims has resulted in a “significant increase in higher-risk loans FHA endorses.” Lenders that submit higher-risk mortgages to the TOTAL Mortgage Scorecard through an automated underwriting system now may be informed that these mortgages must be manually underwritten. The FHA noted that “[t]he lender’s final underwriting review decision for those mortgages must be documented in accordance with existing FHA requirements for manually underwritten mortgages.”