FHA Announces Updates to Handbook 4000.1

FHA recently published FHA INFO 2026-18 announcing updates to its Single-Family Housing Policy Handbook 4000.1.  The changes add new guidance and incorporate certain previously issued Mortgagee Letters.

On the origination side, FHA addressed two documentation points. The Handbook now defines three means for verification of employment (VOE), Written VOE, Electronic VOE, and Reverification of Employment, for both the TOTAL Scorecard and manual underwriting tracks.  FHA also clarified that Federal Home Loan Bank Homeownership Set-Aside funds may be structured either as a grant or as secondary financing.  Finally, for the Home Equity Conversion Mortgage (HECM), FHA updated the set of documents that must be submitted by the Mortgagee to HUD to obtain FHA insurance to include the most recent HECM Life Expectancy Set-Aside analysis and the related borrower notice.

On the servicing side, FHA removed the maximum-arrearage cap on Outside the Waterfall loan modifications, expanding the pool of borrowers who can qualify for loss mitigation under that option.  With respect to the foreclosure timeline, servicers are directed not to file an automatic Extension and Variances Automated Requests System (EVARS) request, and a new Appendix 6.1 consolidates the list of automatic extensions to HUD’s foreclosure-initiation timeline.

Changes that are incorporated for previously published Mortgagee Letters have an effective date as announced in the related Mortgagee Letter.  All other changes are effective on August 12, 2026.