Written By: Glenn Michaels, Op-Ed Writer
If there is no delay, the new Single Family Handbook (SFH) – 4000.1 is fully in effect with cases taken on or after September 14, 2015. I have already written three articles full of changes that are effective September 14, 2015.
New model note and mortgage forms: The new handbook unlike the past HUD will not require the use of the model forms, but their use is recommended as the forms contain the necessary amendments to satisfy the new handbook requirements.
Closing and Post Closing Requirements: The Single Family Handbook (SFH) – 4000.1 consolidates the closing and post-closing requirements for Lender Insurance (LI) mortgagees and non LI mortgagees. It contains sections regarding pre – insurance review of the case binder. Documents and case binder compilation that appears to apply to LI and non – LI mortgagees. In addition it contains sections for LI and non – LI mortgagees with instructions on endorsement and case binder submission.
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Pre – insurance review: The Single Family Handbook requires mortgagees to conduct a pre – insurance review to ensure that all applicable documents are in the Uniform Case Binder Stacking Order are included is included in the endorsement submission. The pre – insurance review must be conducted by staff members not involved with the origination, processing and/or the underwriting of the mortgage.
When conducting the pre – insurance review, mortgagees must review and verify numerous items. For example, lenders must ensure that the Underwriting and Transmittal form (HUD – 92900-LT) is completed in full, signed and dated by the underwriter. In addition, mortgagees must confirm that the note is the authorized copy, the borrower name on the note is correct, the required language from the model note is present, and the note has been executed among other requirements. The handbook requires mortgagees to review many other documents, including the settlement statement, that the Uniform Residential Loan Application, credit report, borrowers CAIVRS report among other documents. In addition the handbook includes specific instructions on inspections and repair escrow requirements for loans pending, closing or endorsement in a Presidentially Declared Federal Disaster Area,
Case Binder Submission: The Single Family Handbook requiresmortgagees to compile uniform case binders. As with past guidance, the handbook includes a list of documents that must be included in case binders. However the list has been altered so it is important for mortgagees to review the new requirements carefully. Much like the current requirements, the handbook contains separate sections for governing case binder submissions for LI and non – LI mortgagees. Non – LI mortgagees’ case binders must be received by the Homeownership Center no later than 60 days after the disbursement date. LI mortgagees must only submit case binders involving a severe case warning or if requested to do so by HUD.
In conclusion: The new Single Family Handbook – 4000.1 consolidates and streamlines previous HUD policies in one source, making it easier to locate information and to work with HUD. Mortgagees should go over all of the changes to make sure FHA loans are originated, processed, underwritten, closed, and submitted for insurance.
About The Author
Glenn Michaels - As an op-ed writer, Glenn Michaels is a mortgage underwriting instructor for CampusUnderwriter (www.MortgageUnderwriter.org). As a BBA & FHA DE Underwriter, Glenn is a Pace University graduate who also graduated from New York University’s School of Mortgage Finance. Glenn has conducted numerous training classes and has worked in the mortgage banking industry for 38 years.