Fha LoanMortgage Loan
The HUD FHA introduces a new automated credit verification system with incorrect taxonomy.
The US Department of Housing and Urban Development (HUD) Mortgagee Letter (ML) 2017-03, "Federal Housing Administration (FHA) Loan Review System - Implementation and Process Changes. "The ML indicates that HUD is creating a new Loan Review System (LRS) that provides an online environment for FHA loan checks and other features for detached mortgage loans.
This new requirement applies to all FHA Title II single family programmes, as well as reversal mortgage programmes. ii ) follow-up of credits that have been chosen for pre-insurance verification so that mortgage creditors without creditor insurer (LI) credit control authorities can inspect them; and iii) management of credit engineering checks after endorsement and supervision of lenders.
The HUD will also use the RRS to create automatic enquiries and dunning letters for creditors, to react to the results and to provide documents related to evaluations. After HUD, for example, has informed a mortgage creditor of an imminent surveillance audit, they can retrieve information about the imminent audit from it.
Upon completion of the audit, HUD will record all results in the LRS, where it will also indicate the legal redress and answers requested by the creditor. The ML 2017-03 states that HUD intends to use the quality assessment method for single-family homes (defect taxonomy) to help identifying and categorising credit assessment outcomes. The HUD released the Defect Taxonomy on 18 June 2015 to give FTA creditors greater clarification and visibility.
Failure taxonomy provides different levels of errors at the credit layer as well as how HUD plans to categorise certain data deficits. There are nine different error classes, with more specialized errors organised under each class, code to source and cause the errors, and four levels of error gravity.
Mortgage creditors must react to all significant observations in the context of error taxonomy via the new LRS. LRS will supersede Underwriter Reviews and FHA Connection features such as FHA Connection Enfindings, as well as some of HUD's latest email and other handheld communications workflows. Creditors can retrieve and verify LRS credit history summaries and report aggregated statistical and credit check results.
Mortgage creditors, like HUD, will use the new facility for various different uses. Mortgage creditors who have received from HUD letter of acceptance for DE programme test cases dating 1 April 2017 or later, for example, must verify all test results in the facility and react to HUD's enquiries related to DE programme test cases, as well as the necessary revisions and provision of the necessary documents.
Furthermore, as mentioned above, mortgage creditors must react through the intermediary of the lessee credit control system to significant observations made by HUD in the course of review supervision. It will also supersede the lender's Neighborhood Watch function and mortgage creditors will be obliged to notify frauds, misrepresentations and other significant results through the CRS. Mortgage creditors must authorise certain employees to carry out within the new system appropriate duties to fulfil the necessary duties, in particular to conclude compensation arrangements.
HUD's declared objective in the implementation of the Loan Control System is to coordinate the results of the credit check across all HUD areas and to integrate the defect taxonomy. Following the introduction of the standard, HUD will make all necessary changes to the single-family house directive manual (4000.1). Meanwhile, on Thursday, January 26, 2017 at 14:00 EST, HUD will offer a mortgage creditor online seminar to help understand the system and related changes to the processes.