The U.S. Department of Housing and Urban Development (HUD) issued FHA INFO #20-44 on June 22nd. Of the numerous updates, including Mortgagee Letters, issued as guidance under the Federal Housing Administration (FHA) Single Family Housing area, the underlying policy waivers introduced in this update should not be taken lightly. The obvious goal is to provide temporary requirements under the Coronavirus Aid, Relief, and Economic Security (CARES) Act and offer real relief to homeowners impacted by COVID-19.
These policy waivers are certainly viewed as a reprieve for many mortgagees that have found themselves resource restricted and productively impaired under COVID-19. What is important to note as a mortgagee is that EPD audits remain a valuable tool in ensuring the quality of your originations, and most importantly an aid to help differentiate areas of risk that may notbe tied to COVID-19. Additionally, with the temporary migration from field reviews to desk reviews, establishing a sample audit to ensure appropriate property concerns are identified will assist in minimizing overall risk as well.
At Quality Mortgage Services (QMS) we understand that identifying and implementing temporary relief requirements and programs, while managing staffing availability and consumer concerns, is a tremendous challenge. As you read through the highlights of the latest temporary guidance from HUD, please bear in mind that we are here to assist you in understanding the impact of requirement changes, as well as helping to ensure your organization remains safe and sound during COVID-19.
Temporary Waiver of QC Requirements for Early Payment Defaults (EPDs)
Temporarily suspends the monthly selection process by which mortgagees select and review EPDs (60+ days delinquent during first six payments).As the financial impact of COVID-19 on homeowners has spread, FHA has noted a sizable increase in EPDs.The thought behind this policy waiver is that homeowners impacted by loss of employment or income due to pandemic influence is the primary cause for these EPDs, as opposed to non-compliance with FHA guidelines. This waiver is applicable for May, June and July QC selections and does not in any way extend to other FHA loan-level QC requirements. – RE: FHA SFH Policy Handbook 4000.1, Sections V.A.3.a.i(C) and V.A.3.a.iv(B)(2).
Temporary Partial Waiver of QC Requirements for Field Reviews of Appraisals
Temporarily suspends the FHA requirement to complete targeted field reviews on a 10% sampling of monthly appraisals as a part of post-closing QC audits. Third party tools are permitted as an alternative and is considered a more applicable approach given social distancing requirements that are currently in place. This waiver is applicable for current in process QC reviews, as well as May, June and July QC selections and does not in any way extend to other FHA appraisal QC requirements. – RE: FHA SFH Policy Handbook 4000.1, Section V.A.3.c.ii(C)(1)(a).
Whether you’re taking advantage of this time to minimize activities under waivers,working to stay abreast of temporary requirements, and/or trying to prevent risk under new ways of doing business, QMS strives to meet you where you need us most.As a boutique full-service risk management and mortgage compliance solutions company, that has been active in the mortgage industry for decades, we are able provide highly customized solutions to solve your unique QC needs.Don’t work to meet your QC partners’ criteria, let us work for you. We offer a unique set of solutions to support your quality control and audit needs, including pre-funding, pre-purchase due diligence, post-closing and early payment default, as well as numerous other tools and audits. QMS is an active member of the Mortgage Bankers Association (MBA) and a veteran-owned small business committed to both the industry and our valued customer base.
Visit us at www.qcmortgage.com to see how our team can assist you in navigating this difficult time for both our industry and homeowners.