HUD provides sample costing guidelines review with FHA loans

The US Department of Housing and Urban Development (HUD) recently issued a mortgage loan drawings on the review of value (ROV) policy related to reviews for FHA mortgage insurance loans. The Mortgage Book template follows the action plan items outlined in the Property Classification and Assessment. action plan released by HUD and other federal agencies in March 2022. (Although not yet released until January 2023, it appears that HUD plans to release the figure Book mortgages in 2022 based on calendar year 2022 references in the sample book.)

Comments on the draft Mortgage Letter are due by February 2, 2023. Comments can be submitted by completing the Information Worksheet available through FHA Drafting Tablethen email the completed Worksheet to sffeedback@hud.gov.

In addressing the draft of the mortgage book, HUD Secretary Marcia Fudge said that “HUD is committed to making the evaluation process appropriate throughout the country.” We must eliminate discrimination in housing affordability so that everyone can equally reap the economic benefits – and generational wealth – that come with home ownership,” and that “

HUD explains in the draft Mortgage Letter that FHA’s current guidance allows an underwriter to request an ROV if the appraiser does not think the information is appropriate on the effective date. the review, and the ROVs under this existing system can be initiated at the request of a potential borrower. However, HUD also notes that the FHA has not previously clarified the criteria for borrowers’ requests for reconsideration. Therefore, the FHA plans to update the current ROV standards to add specific guidelines, provided in the draft Mortgage Letter, to conduct and document a borrower’s evaluation of evaluation results.

HUD also states in the Mortgage Letter that the FHA policy is to allow FHA lenders get a second appraisal on cases that document deficiencies in the appraisal and that the appraiser cannot resolve. A sample Mortgage Letter states that “HUD recognizes that material defects may involve legal or ‘is bias; therefore, the list of examples of adverse events in (HUD) Manual 4000.1 is expanded to include those events.”

HUD notes that in order to provide FHA with information about the timing and outcome of borrower ROV applications, the FHA Connection is being updated to include the required fields in the FHA Connection Insurance Application and home equity conversion mortgage (HECM) forms to collect the above information. such requests.

The draft of the Mortgage Letter will review the current guidelines to find that the ROV refers to the secretary’s request for “(a) ppraiser to review the full and complete contribution the (p) property information, analysis, or market information” was relevant on the effective date of the evaluation. The draft of the Mortgagee Letter will revise the current guidance to provide If an ROV is requested, the appraiser’s response must be included in an appraisal update, which must be entered into FHA’s Electronic Appraisal Delivery (EAD) portal and signed into FHA Connection.

The existing guidelines will also be updated to add that the secretary must review all borrower requests for review of the results of the appraisal, and the issuer must review the appraisal in accordance with FHA’s requirements for appraisal review and appraisal quality. In addition, FHA lenders will be required to (1) retain in the case that the request for review is submitted the review decision, the review decision, and the response provided to the borrower, and (2) complete information regarding the borrower’s request for review of FHA insurance application decisions and FHA HECM insurance application ratings on FHA Connection.

The proposed Mortgage Letter will replace existing guidelines regarding the appraiser’s obligations when an ROV is required. If the FHA lender requests an ROV, the appraiser is required to (1) review all relevant property information and market information received from the clerk as of the effective date of the appraisal, including purchase additional properties or leases, and (2) summarize the analysis of all additional information provided by the underwriter in an update of the appraisal report .

HUD notes in the draft mortgage letter that, in order to increase consumer awareness of the option to request a review of the results of a review, FHA is adding a notice to the Seller’s Copy of form HUD-92800.5B Financial Statement of Costs ratio.

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