FHA Publishes Update to the Single Family Housing Policy Handbook 4000.1

On September 30, 2016, FHA published the latest update to its Single Family Housing Policy Handbook 4000.1 (“SF Handbook”). The update contains technical changes for consistency and clarity and several policy updates. These policy updates include the following:

• Origination and Underwriting: An increase from $5,000 to $10,000 for the amount that buyers of HUD real-estate owned (“REO”) homes are required to place into escrow for repairs on HUD REO properties that do not meet FHA’s minimum property standards.
• Appraisal and Property Requirements:
  • Additions related to residential Water Purification Systems, and the addition of a Notice of Water Purification System sample document, are not policy changes as they are contained in FHA regulations. These additions do, however, enhance the comprehensive nature of the SF Handbook and its consistency with regulations.
  • The addition of language regarding the Appraisal Effective Date, which cannot be a date before the FHA Case Number assignment, adds specificity to the SF Handbook on this operational practice.
• Servicing: Changes throughout the Servicing and Loss Mitigation section revise policy to integrate into the SF Handbook policy changes announced in Mortgagee Letter 2016-14. These changes must be implemented, as announced in Mortgagee Letter 2016-14, by December 1, 2016.
• Quality Control, Oversight,and Compliance for Mortgagees with Multifamily Authority: Exceptions to the Quality Control, Oversight and Compliance section clarify that certain sections do not apply to mortgagees with: Originate Multifamily authority, Service Multifamily authority or Service/Originate Multifamily authority; nor to Multifamily operations when a mortgagee has both Single Family and Multifamily authority.

Also, concurrent with this SF Handbook update, the previously published sections covering Claims and disposition become effective.

New and Updated Supplemental and Model Documents

Concurrent with the SF Handbook update, FHA made the following supplemental model documents available on its Supplemental Documents and Model Documents web pages, respectively:

• Added Borrower Notice of Water Purification System supplemental document, which contains sample language that mortgagees may choose to use to comply with FHA’s individual residential water purification system policies;
• Updated Single Family Default Monitoring System Reporting Codes and Termite Treatment Exception Areas supplemental documents; and
• Updated HUD Earnest Money Forfeiture and Return Policy model document.

Effective Date: September 30, 2016

FHA’s SF Handbook September Update online article is available at: http://portal.hud.gov/hudportal/documents/huddoc?id=SFHB_Online_9_30_16Update.pdf.

The online or portable document format SF Handbook from HUD’s Client Information Policy Systems’ Housing Handbooks web page is available at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh.