On July 10, 2019, FHA published an update to the Single Family Housing Policy Handbook, or Handbook 4000.1, that included policy guidance, clarifications, corrections, and additions.
Some key provisions of the Handbook’s update include the following:
- Revision to the definition of “Minimum Decision Credit Score” (MDCS) to address situations where three credit scores are reported, in which case the median score is the MDCS;
- Guidance relating to credit reports which specifies that a credit report must include all credit and legal information not considered obsolete under FCRA, including information for the last seven years, which consumer reporting agencies have reported as verified and currently accurate regarding: bankruptcies, judgments, lawsuits, foreclosures, and tax liens;
- Expansion to the definition of “interested parties” to now include mortgagees and third party originators;
- Exemption of premium pricing credits offered by mortgagees or third party originators from the 6 percent limit of the sales price that may be contributed by interested parties toward borrower’s origination fees, other closing costs, prepaid items, and discount points;
- Clarifying language to the required documentation section relating to interested party contributions that states that a mortgagee must document the total interested party contributions on the sales contract or applicable legally binding document and closing disclosure or similar legal document; and
- Addition of language clarifying that properties with pending mortgages or endorsements in areas under a Presidentially-Declared Major Disaster Areas designation must have a damage inspection report dated after the incident period, as defined by FEMA, or 14 days from the incident period start date, whichever is earlier.