Processing FHA TOTAL and VA Mortgages

This reference contains information to help you process Federal Housing Administration (FHA) mortgages and Department of Veteran Affairs (VA) mortgages using Loan Prospector. Information on FHA TOTAL Mortgage Scorecard is presented first, followed by VA Loan information.

FHA TOTAL
Introduction
The FHA TOTAL Mortgage Scorecard (FHA TOTAL) is a credit assessment engine developed, housed and maintained by the U.S. Department of Housing and Urban Development (HUD) to assess the credit worthiness of FHA borrowers and to predict the default probability of FHA loan applicants. The credit data used in the assessment and FHA TOTAL results are FHA proprietary information and are passed through Loan Prospector. Loan Prospector provides access to FHA TOTAL and then presents the FHA TOTAL results. This section provides general guidance for processing FHA loan applications using FHA TOTAL through Loan Prospector. “TOTAL” stands for “Technology Open to Approved Lenders.” FHA TOTAL requires additional data elements, and merged credit data obtained through Loan Prospector from a credit reporting company (CRC), or participating technical affiliate. Loan applications receiving an Accept risk class from FHA TOTAL through Loan Prospector will benefit from reduced documentation and relief from certain representations and warranties as compared to manually underwritten FHA loans. For the latest updates and changes from FHA regarding their policies and regulations, refer to their HUDCLIPS website at http://www.hud.gov/offices/adm/hudclips/index.cfm.

Objectives
This reference covers what FHA TOTAL is, data entry requirements, obtaining the required merged credit report, completing an assessment, and the FHA TOTAL Mortgage Scorecard Full Feedback Certificate. After reviewing this reference, you will be able to: Use Loan Prospector to assess an FHA loan application through FHA TOTAL Explain the credit and documentation waivers available when using FHA TOTAL Define the Accept and Refer risk classes for FHA loan applications Document an FHA loan application for an Accept or a Refer risk class

Vertical revision bars " | " are used in the margin to highlight new requirements and significant changes.

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How the FHA TOTAL Mortgage Scorecard Works in Loan Prospector

After loan data is entered or imported into Loan Prospector and the appropriate services are requested, the following occurs: 1. Loan Prospector assesses eligibility for FHA TOTAL and prepares the data by performing calculations. 2. Loan Prospector obtains a merged credit report from a credit reporting company or affiliate (merged credit reference numbers may be used). 3. Loan Prospector sends required loan data and merged credit data received from the credit reporting company or affiliate to FHA TOTAL. 4. FHA TOTAL performs eligibility checks and the credit risk assessment. 5. FHA TOTAL sends the results back to Loan Prospector. 6. Loan Prospector assembles the results and prepares the applicable credit policy and documentation feedback messages. Loan Prospector also performs the maximum mortgage limit validation. 7. Loan Prospector presents all the results in the FHA TOTAL Full Feedback Certificate. Once results are received, the following can be completed: Process the loan application as an Accept or Refer, as applicable Underwrite the appraisal Make the final lending decision

Lender Requirements
Before using Loan Prospector with FHA TOTAL to assess FHA loans, you must be an FHA-approved broker or lender. Only FHA-approved Direct Endorsement lenders can deliver mortgages to FHA for endorsement. In addition to having certain agreements and approvals in place with FHA, as defined by HUD, the following requirements need to be completed prior to accessing FHA TOTAL through Loan Prospector:

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Requirement
1. FHA Lender ID and FHA Sponsor ID

How to Complete
Brokers need an FHA Lender ID and corresponding FHA Sponsor ID to process FHA loan applications. Lenders need an FHA Lender ID, and FHA Sponsor ID (if applicable). Contact the Federal Housing Administration Office of Lender Approval and Certification to request or verify your FHA Lender ID. Brokers and lenders assigning FHA loans should contact the wholesaler(s) directly for their FHA Lender ID to enter in the FHA Sponsor ID field.

2. Authorization to use FHA TOTAL

Your FHA Lender ID and FHA Sponsor ID (if applicable) must first be certified in order to access FHA TOTAL through Loan Prospector. The loan originator, and sponsor if applicable, must each certify their FHA Lender ID. To certify your FHA Lender ID: Have your designated Application Coordinator use their personal ID and password provided by FHA to log on to the FHA Connection at http://www.hud.gov/offices/hsg/connect.cfm Select the “ID Maintenance” icon Select the “FHA Administration” icon Select “TOTAL Mortgage Scorecard Acknowledgement” Accept the “Acknowledgement of Terms and Conditions for TOTAL Mortgage Scorecard

3. CRC, and if applicable, technical affiliate, relationships to obtain merged credit within Loan Prospector 4. Latest version of loan origination system (LOS) software if importing

FHA TOTAL requires the use of a merged credit report. It is recommended that relationships be established with two or more CRCs, and if applicable their technical affiliates, for access to merged credit reports obtained through Loan Prospector. Refer to http://www.LoanProspector.com/about/crc.html for information on establishing these relationships. Check with your LOS vendor to see if you have the latest version of their software. It must include the FHA Lender ID and FHA Sponsor ID data fields.

Mortgage Eligibility Requirements
FHA Purchase and Regular Refinance transactions can be assessed by FHA TOTAL through Loan Prospector and includes: FHA 203(b); 15-, 20-, and 30-year fixed-rate FHA 251 – Adjustable-Rate Mortgage (ARM) FHA Hybrid ARMs (3-, 5-, 7- and 10-year ARM) FHA 234 – Condominiums FHA 203(k) – Rehabilitation loans

In addition, new construction loans can be assessed by FHA TOTAL Mortgage Scorecard through Loan Prospector. Refer to Loan Prospector – How to Enter Mortgages for Newly Constructed Homes reference for information on entering FHA new construction loans in Loan Prospector. Streamlined Refinances are not eligible for evaluation by FHA TOTAL per ML 2009-32.

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asp.FreddieMac.” Dollar amount of discount points to be financed on FHA no cash-out refinance.pdf) for detailed information on using merged credit report options. the credit data from the merged credit report is an essential part of the required data used in the FHA TOTAL assessment.1/4155. An additional fee for the merged credit report will be charged by the CRC.2 at www.1/4155.com/learn/pdfs/uw/using_mc. Dollar amount of FHA Up-front Mortgage Insurance Premium that is rolled into the loan amount.com/learn/ Page 4 .asp for detailed information or call 1-800-CALLFHA. Merged credit reference numbers may be used for a small fee if your process includes obtaining a merged credit report outside of Loan Prospector. or technical affiliate.gov/FHAHandbook/prod/index. However.2 at www. Refer to the LoanProspector.gov/FHAHandbook/prod/index. Value indicating if borrower is currently delinquent or in default on a federal loan. the following additional data is required for FHA loan applications (some fields may be required for other loan types): Field Name Alimony Obligation (if applicable) Description Monthly amount of alimony lender chooses to treat as a reduction in borrower’s monthly gross income. Buyer Closing Costs Federal Delinquency/Lien Financed Discount Points (if no cash-out refinance) Financed MIP March 2010 www. “Yes.fhaoutreach. If a CAIVRS authorization indicates a Federal Delinquency/Lien. Dollar amount of closing costs borrower is paying toward transaction.com online help or Merged Credit Report Options quick reference (http://www.FreddieMac. Required Data for FHA Loans In addition to the data required for all loan types processed through Loan Prospector.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Merged Credit Requirements You must obtain a merged credit report through Loan Prospector for FHA TOTAL. rather than as debt obligation.fhaoutreach. Standard FHA Processes Accessing FHA TOTAL through Loan Prospector allows you to process more FHA loan applications in less time with less work than manual underwriting. according to the Liabilities section of the Online HUD Handbook 4155. indicate. For FHA loan applications. Infiles are not requested from the repositories and are not used in the assessment performed by FHA TOTAL. the following FHA standard processes remain the same when accessing FHA TOTAL through Loan Prospector: Obtaining FHA case number Obtaining Credit Alert Interactive Voice Response System (CAIVRS) authorization Ordering and underwriting appraisals Determining whether a condominium or planned unit development (PUD) has FHA approval Completing a HUD-92900-LT or 92900-A Confirming the correct FHA mortgage insurance premiums (MIP) Obtaining FHA MIP refund information Obtaining FHA refinance authorization Refer to the Online HUD Handbook 4155.

To be included on the Feedback Certificate and accepted by FHA. In addition to your User Name and Password used to access Loan Prospector. Results If you have questions regarding the field. you’ll need your certified FHA Lender ID.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Field Name FHA Case Number Description FHA-assigned number identifying an FHA loan application. Zip code of property being financed. without dashes. The following information provides the navigational steps for entering FHA loan data in Loan Prospector: Step Login and enter loan data on the Loan File Setup and Loan Application Data pages.FreddieMac. Select ‘FHA’ for the Mortgage Type field. March 2010 www. FHA-assigned number identifying the broker or lender originating the mortgage. FHA Lender ID FHA Sponsor ID Property County Name Property State Property Zip Code How to Access FHA TOTAL Mortgage Scorecard and Enter FHA Loan Data To access FHA TOTAL. FHA-assigned number for the sponsoring wholesaler underwriting the mortgage. Enter all the remaining required loan data and click Next to access the FHA page. State location of property being financed.com/learn/ Page 5 . This ID is required if the mortgage is being underwritten by a different lender (other than FHA Lender ID). login to Loan Prospector. This number should also correspond to the wholesaler selected on the Assign Loan page. and FHA Sponsor ID as applicable. This ID is required on all FHA loan applications. click the field label to access online help. you must enter the FHA Case Number on or before the last submission. County name of property being financed.

Importing a loan with a different FHA Lender ID or FHA Sponsor ID will also overwrite these fields.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Step Enter the FHA-specific data on the FHA page. If you enter this data on the User Profile page. Click Next.FreddieMac. you may manually overwrite this data on the FHA page when necessary.com/learn/pdfs/uw/fun_guide.com/learn/ Page 6 . For originating brokers or lenders working with wholesalers. The FHA data page displays: Results The FHA Case Number must be entered on or before the last submission or FHA will not endorse the loan. March 2010 www.pdf. If there is a change in the assigned wholesaler. the data will automatically populate on the FHA page. on the User Profile page. You have the option to enter the Lender ID (and Sponsor ID if applicable). For detailed information on the Assign Loan feature. refer to the Loan Prospector Functionality Guide located at http://www.FreddieMac. be sure to update the FHA Sponsor ID accordingly. In the event the FHA Lender ID or FHA Sponsor ID changes. make sure the FHA Sponsor ID entered on the FHA page matches the wholesaler selected on the Assign Loan page.

com/learn/ Page 7 .FreddieMac. Results The Request Services page displays with Automated Underwriting selected: March 2010 www.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Step Select Merged Credit on the Request Services page.

or technical affiliate. and if applicable. or leave the field blank if you are not using a specific technical affiliate. Enter a Reference Number if applicable.com/learn/ Page 8 . Merged credit report fees will be assessed by the CRC.FreddieMac. a merged credit report is required. select the technical affiliate from the drop-down list. Results The Request Services page displays with expanded Merged Credit data fields. For loan applications assessed through FHA TOTAL. Then indicate “single” or “joint” merged credit report preference. March 2010 www. An “Invalid” message will be returned if merged credit is not requested. Click Submit.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Step Select a CRC.

you have two options: Wait for the results to display (approximately 2 minutes) View the results later using the Unviewed Results option A message displays confirming loan submission. if you decide to wait for the results.com/learn/ Page 9 . they will display automatically. After confirming the submission. the Confirm Submission page displays. Once the loan is selected. use the Find Loans feature on the Loan Prospector Main page to access the loan and view results. follow the online instructions to correct errors. a list of available results documents will display in the left navigation bar under the View Results section. When prompted. If you have not viewed the results within 14 days. Based on the assessment performed by FHA TOTAL.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Step Click Confirm Submit to submit the mortgage for an FHA TOTAL assessment. otherwise you may access results later using the Unviewed Results option on the left navigation bar for a period of 14 days. If data errors are detected. Accessing FHA TOTAL Mortgage Scorecard Results After submitting the loan application for assessment. the Correct Errors page displays.FreddieMac. Results When no data entry errors are detected. Loan Prospector returns the following results: FHA TOTAL Scorecard Full Feedback Certificate FHA TOTAL Scorecard Documentation Checklist Merged Credit Report(s) from the CRC or technical affiliate March 2010 www.

com/learn/ Page 10 .Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Step Results Upon a successful submission.FreddieMac. the FHA TOTAL Scorecard Full Feedback Certificate displays as follows: March 2010 www.

If the results are not dated within 120 days of the Note date or 180 days if new construction. Reviewing Results Each time you successfully submit a loan application to FHA TOTAL through Loan Prospector. Once merged credit data has been accessed it is no longer accessible from the navigation bar after 7 days unless the loan data is resubmitted. Checklist is titled "FHA TOTAL Scorecard Doc. FHA TOTAL Scorecard Full Feedback Certificate Example Note: New Submissions With FHA Case Numbers Dated on or After October 1. are valid for 120 days prior to the Note Date. 2008please refer to the September 4 Mortgagee Letter 2008-22 and follow these guidelines: • As of October 1. processing and documentation information for the transaction. and until further notice. The Doc. please disregard the message and refer to the September 4 Mortgagee Letter 2008-22 to manually determine the appropriate insurance premiums: March 2010 www. use the Reorder Credit Service to request new credit. and your Case Number issuance date is on or after October 1. If you need to view your merged credit reports after 7 days. including merged credit. if you receive one of the following feedback messages on the FHA TOTAL Mortgage Scorecard Full Feedback Certificate. merged credit will be re-accessed unless any of the following conditions have occurred: Change in loan type Change in specified CRC or technical affiliate Change in joint merged credit borrowers Change in merged credit transaction request type Change in borrower data. The results.com/learn/ Page 11 . New merged credit fees will apply. or 180 days if new construction. including a change in borrower order on a joint merged credit request Non-matching reference number Credit freshness expiration Secondary submission error If critical data changes are required. Selected credit scores are displayed within messages in the Loan Processing Information section. Refer risk classes may have messages displayed in the Credit Risk Comments section indicating reasons why FHA assessed the mortgage as a Refer.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Accessing Merged Credit Reports Merged credit results received from the CRC or participating technical affiliate can be selected from the left navigation bar. The following apply to FHA loan applications: The Full Feedback Certificate is titled "FHA TOTAL Scorecard Full Feedback Certificate". then the loan application must be resubmitted. you must resubmit the loan data to refresh the existing merged credit report.FreddieMac. 2008 In order to effectively determine the required FHA insurance premiums for FHA submissions in Loan Prospector with FHA Case Numbers dated on or after October 1. Upon resubmission. It is recommended that you print the merged credit results and place it in the loan file for future reference. you will receive results providing important data. Checklist".

VH *Confirm the UFMIP percentage in the September 4 Mortgagee Letter 2008-22.com/learn/ Page 12 .50%. the annual premium is . if applicable.55% when LTV > 95%. The FHA Annual Premium Factor is (x. • The following feedback messages should be reviewed for accuracy when received on the FHA TOTAL Mortgage Scorecard Full Feedback Certificate: Message Code VJ VK HK Feedback Message The FHA Upfront Mortgage Insurance Premium (UFMIP) Factor is (x.xx)%.00% for first time homebuyers who completed HUD approved pre-purchase housing counseling. If the refinanced conventional ARM mortgage to FHA mortgage is delinquent. Ineligible for FHA w/values sent–See Upfront Premiums Chart. if LTV ratio <= 95%. The annual premium is . The FHA Upfront Mortgage Insurance Premium (UFMIP) Factor cannot exceed 2.25%*.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Message Code VF Feedback Message The UFMIP for this loan is based on the first time borrower NOT having completed HUD approved pre-purchase counseling. March 2010 www.FreddieMac. when this message appears on a refinance transaction.xx)%. the Upfront Mortgage Insurance Premium (UFMIP) is 2.

FreddieMac. March 2010 www.com/learn/ Page 13 . technical affiliate) through Loan Prospector If reasons for a Refer risk class are provided by FHA TOTAL.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Description Example of Accept results: Example FHA TOTAL title FHA TOTAL returns a risk class and documentation level of either Accept or Refer based on the loan data submitted and merged credit from CRC (or if applicable. they will appear in the Credit Risk Comments section.

but is only applicable if refinancing a conventional ARM mortgage.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Description Example The Loan Processing Information section provides selected credit score information Confirmation that FHA TOTAL assessed the mortgage The FHA Case Number is required on the Feedback Certificate for FHA endorsement The FHA Upfront Mortgage Insurance Premium Factor messages.FreddieMac. an additional FHA Upfront Mortgage Insurance Premium message with the code ‘VH’ is returned in this section. The FHA Annual Premium Factor for this loan March 2010 www.com/learn/ Page 14 . Note: If a refinance transaction.

FHA assessments compare the Property County and Property State submitted to the FHA Maximum Mortgage Limit Tables. the following new message will be returned: “K0 .com/learn/ Page 15 . you can determine if your loan application meets FHA’s eligibility requirements for the geographic area limits. If messages in this section indicate inaccurate data. . correct the errors and resubmit the loan application. . If the loan is for new construction. If the Maximum Mortgage Limit cannot be found for the geographical area submitted. Refer to Handbook and review corresponding Assessment expiration date on feedback certificate”. a message appears advising you to manually validate that the amount is eligible for the specified geographic area.If the loan amount submitted is higher than the maximum mortgage limit. Additional messages in this section indicate the following FHA information: Maximum Mortgage Limit . For Refer loans. Using this automatic service. March 2010 www. a message indicating an FHA Direct Endorsement Underwriter signature is required would appear. you will receive a purchase restriction message on the Feedback Certificate so that you may determine if the loan application is eligible for FHA insurance.FreddieMac.hud. Example Loan Processing Information The Loan Processing Information section of the Full Feedback Certificate provides various types of processing and underwriting messages including: Minimum documentation requirements Validation messages to assist you in ensuring our AUS received the correct data Review messages to bring your attention to specific areas of the loan application requiring closer review.Review for Accuracy: FHA Underwriting Guidelines vary for New Construction and may affect Maximum Mortgage calculations/LTV.gov/. enter ZFHA as the CHUMS ID on HUD 92900LT as indicated in the feedback messages.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Description For Accept loans.Loan Prospector electronically transfers information from the FHA Maximum Mortgage Limit tables found on the HUD website at http://www.

FHA Minimum Down Payment FHA Upfront Mortgage Insurance Premium Factor .This is an estimate of your annual mortgage insurance premium for the loan submitted. you may disregard the message. you will receive specific messages if any of the following occur: A loan application does not meet FHA’s Statutory Investment requirement of 3.FreddieMac.Loan Prospector calculates the Statutory Investment Requirement per line 10d of HUD-92900-LT (3.gov/FHAHandbook/prod/index. If the down payment is less than the statutory investment requirement.1/4155.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Check the spelling of the county name against the spelling in the FHA Maximum Mortgage Limit Tables if you receive the message stating the amount could not be found.asp.5 percent A loan application exceeds FHA’s Maximum Mortgage Limit The Maximum Mortgage Limit cannot be found for a particular geographic region If the Purchase Restriction message “FB Review FHA Statutory Investment Requirement for eligibility” is received and you determine sufficient funds exist per the Online HUD Handbook 4155. you will receive a purchase restriction message on the FHA TOTAL Full Feedback Certificate so that you may determine if the loan application is eligible for FHA insurance.2 at www. FHA Annual Premium Factor . Purchase Restrictions Purchase Restriction message(s) returned on the FHA TOTAL Scorecard Full Feedback Certificate provides the reason(s) a mortgage may not be acceptable for FHA insurance. For example.fhaoutreach.com/learn/ Page 16 .5 percent of contract sales price). March 2010 www. Statutory Investment Requirement .This is an estimate of your upfront mortgage insurance premium for the loan submitted.

pdf.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond FHA TOTAL Mortgage Scorecard Doc. the loan file must be documented according to the streamlined guidelines established by FHA for loan applications evaluated by their scorecard.FreddieMac. March 2010 www. You may also want to refer to the FHA TOTAL Mortgage Scorecard and VA Documentation Matrix located at http://www.com/learn/pdfs/uw/total_matrix. The FHA TOTAL Scorecard Full Feedback Certificate provides guidance regarding the documentation and underwriting requirements for FHA loan applications. Checklist Description Example FHA TOTAL title CAIVRS reminder FHA TOTAL Documentation requirements Understanding the Results To be eligible for delivery to FHA.com/learn/ Page 17 .FreddieMac.

1/4155. and FHA agrees to endorse the mortgage. For FHA mortgages. the lender is not responsible for representations or warranties related to determining borrower credit reputation. it allows you to take advantage of substantially fewer documentation requirements than traditionally underwritten FHA loan applications. March 2010 www.fhaoutreach. The Refer credit warranty message states: LOAN PROCESSING INFORMATION -----------APPLICABLE CREDIT WARRANTIES AND WAIVERS-------F6 Credit Warranty: Required to determine that the borrower shows the willingness and financial ability to pay. and accurate and the entire mortgage package meets FHA requirements.gov/FHAHandbook/prod/index. complete. it has identified weaknesses in the borrower’s credit reputation and/or capacity that require further assessment. The Accept risk class substitutes for an FHA Direct Endorsement underwriter’s personal review of the borrower’s credit and capacity. Risk Class Accept If FHA TOTAL returns a risk class of Accept. The Accept credit warranty message states: LOAN PROCESSING INFORMATION ----------APPLICABLE CREDIT WARRANTIES AND WAIVERS--------F0 Credit Warranty: Not required to determine borrower shows the willingness to pay. Risk Classes and Documentation Levels FHA TOTAL will return a risk class indicating the level of risk identified.FreddieMac. If FHA TOTAL returns a Refer risk class. If FHA TOTAL returns a documentation level of Refer.2 at www. standard documentation requirements are available for loan applications assessed by FHA TOTAL. you may need to contact 1-800-CALLFHA for specific credit policy-related questions and situations not addressed in the results.asp. the borrower’s credit reputation and capacity are acceptable to FHA. Descriptions for the FHA TOTAL documentation levels are also provided in the following table. responsibility for credit representations and warranties. For FHA loan applications receiving a Refer risk class.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond In some cases. Descriptions of the FHA TOTAL risk classes are provided in the following table.com/learn/ Page 18 . provided the data is true. Documentation Level Accept If FHA TOTAL returns a documentation level of Accept. an FHA Direct Endorsement underwriter must analyze the entire application to determine if the mortgage qualifies for FHA endorsement in accordance with the Online HUD Handbook 4155. FHA TOTAL will return a documentation level indicating the minimum level of documentation the Seller must obtain for the FHA TOTAL mortgage. Refer Refer Representations and Warranties FHA loan applications receiving an Accept risk class through FHA TOTAL Mortgage Scorecard benefit from relief of certain lender representations and warranties as described in the following paragraphs. and underwriting and documentation requirements for the FHA TOTAL mortgage. the lender is responsible for representations or warranties related to determining borrower credit reputation. Credit For FHA loan applications receiving an Accept risk class.

you will need to resubmit the loan application.com/learn/ Page 19 . You or the FHA Direct Endorsement underwriter. manually downgrade to REFER. for approving the loans that exceed FHA-established debt ratios. including compensating factors. as applicable. must determine all borrowers have a clear CAIVRS number. the lender is not responsible for determining whether the borrower’s monthly housing payment-to-income ratio and monthly debt-to-income ratio are acceptable to FHA. March 2010 www. You also may be required to reclassify the loan to a Refer risk class. the lender is responsible for determining whether the borrower’s monthly housing payment-to-income ratio and monthly debt-to-income ratio are acceptable to FHA.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Ratios For FHA loan applications receiving an Accept risk class. Regardless of the risk class. The Accept ratio warranty message: LOAN PROCESSING INFORMATION ---------APPLICABLE CREDIT WARRANTIES AND WAIVERS---------FY Ratio Warranty: Not required to determine if the borrower's monthly housing and monthly debt ratios meet program requirements. LOAN PROCESSING INFORMATION -----------APPLICABLE CREDIT WARRANTIES AND WAIVERS-------KC: If CAIVRS indicates federal delinquency/lien. For FHA loan applications receiving a Refer risk class. If an applicant has a credit alert status problem. CAIVRS FHA loan applications are subject to Credit Alert Interactive Voice Response System (CAIVRS) authorization showing no delinquent obligation or claim payment for all borrowers. The following messages may be returned on the FHA TOTAL Full Feedback Certificate: CREDIT INFORMATION -----------APPLICABLE CREDIT WARRANTIES AND WAIVERS-------HA: If CAIVRS indicates delin/lien. If you receive a CAIVRS authorization for any borrower showing a delinquent obligation or claim payment. You may also be required to reclassify the loan application to a Refer risk class. The Refer ratio warranty message in our AUS states: LOAN PROCESSING INFORMATION ----------APPLICABLE CREDIT WARRANTIES AND WAIVERS----FZ Ratio warranty: Required to document reasons. the applicant must contact the agency reporting the issue and resolve it in order to be eligible for FHA endorsement. this loan must be documented and underwritten to FHA’s REFER requirements. ensure that the data field for Federal Delinquency/Lien is marked “Yes” and resubmit the loan.FreddieMac.

If the inaccurate information has been corrected at the repositories.asp. The merged credit data does not contain a reference for each significant open debt listed on the loan application.com online help or Merged Credit Report Options quick reference at http://www.pdf for information on using this service.com/learn/pdfs/uw/using_mc. The lender retains all authority to make the lending decision. but the merged credit data contains incorrect identifying or significantly inaccurate information.gov/FHAHandbook/prod/index. assess the borrower(s) credit reputation if required. Include any debts resulting from credit inquiries in the past 90 days in the total monthly debt reported to Loan Prospector.FreddieMac. manually reclassify the loan application to Refer.fhaoutreach. Document all borrowers' credit reputations according to the Online HUD Handbook 4155. Refer to the LoanProspector. Then… Enter the correct information into Loan Prospector and request the assessment again. If incorrect identifying or significantly inaccurate information still exists.FreddieMac. you will proceed with review of the appraisal. How to Document Credit Information The table below provides some of the typical recurring issues and required actions associated with documenting credit information for FHA loan applications assessed by FHA TOTAL. The merged credit data has accounts listed as "will rate by mail only" or "need written authorization". If… The merged credit data obtained through Loan Prospector contains incorrect borrower identifying information for any of the following: Name Social Security Number The loan application receives an FHA Accept risk class.1/4155.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond The Lending Decision Once you’ve validated the necessary data and results from FHA TOTAL. • The FHA Direct Endorsement underwriter must base the assessment of the borrower’s credit reputation on the borrower’s entire credit history for all borrowers as outlined in the Online HUD Handbook 4155.asp for FHA loan applications. Obtain a separate written verification for each significant debt reported on the loan application but not verified on the merged credit data.com/learn/ Page 20 . should be directed to the lender. • March 2010 www.2 at www. Obtain a separate written verification for each applicable account. including the use of adverse actions notices.2 at www. Any issues or questions regarding granting or denying credit.gov/FHAHandbook/prod/index.1/4155. close the loan and submit for FHA endorsement. The loan application receives a Refer risk class. you may use Loan Prospector’s optional Reorder Credit Service to request fresh merged credit for individual borrowers or joint borrower pairs.fhaoutreach. and Order a triple-merged credit report or RMCR or independent thirdparty information to clarify the inaccuracy. make the lending decision.

. All other loan applications require a written explanation from the borrower. All Loan applications: No explanation of derogatory credit is required for loan applications receiving an Accept risk class.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond If… The FHA Direct Endorsement underwriter concludes that the borrower’s credit reputation is acceptable despite significant adverse or derogatory information.1/4155. Any credit or ratio waivers listed on the FHA TOTAL Full Feedback Certificate are invalid.You must obtain new merged credit if any critical data changes (i. . Modifying and Resubmitting FHA Loans You may resubmit a loan application to FHA TOTAL up to 15 times without incurring an additional assessment fee. Each submission. or 180 days if new construction.. Accept Risk Class: Reclassify the risk class to Refer. or 180 days if new construction.).gov/FHAHandbook/prod/index.FreddieMac. critical borrower data and submitting entity after the first 120 days to maintain the same credit data for 180 days. technical affiliate). March 2010 www. The merged credit data shows that a mortgage or significant debt is greater than 90 days past due and the credit report is up-to-date. If critical borrower data changes are required.asp. change in Joint merged indicator from single to joint or vice-versa. merged credit will be re-accessed unless any of the following conditions have occurred: Change in loan type Change in specified CRC or technical affiliate Change in joint merged credit borrowers Change in merged credit transaction request type Change in borrower data. Refer Risk Class: Underwrite and document the loan application to the Refer risk class and documentation requirements.2 at www.e. Document according to Refer documentation guidelines. Then… Document the loan application according to the reduced documentation requirements for a Refer risk class. including: The final risk class and documentation level is greater than 120 days from the Note Date. change in CRC or technical affiliate. Upon resubmission. The merged credit data contains derogatory information. counts once toward the transaction limit.If you resubmit a new construction loan you must keep the same CRC (and if applicable. including a change in borrower order on a joint merged credit request Non-matching reference number Credit freshness expiration Secondary submission error You may need to resubmit your FHA loan application for a variety of reasons at some point in your process.fhaoutreach. regardless of the number of services requested. use the Reorder Credit Service to request new credit. etc.com/learn/ Page 21 . The merged credit data results are greater than 120 days from the Note Date. New merged credit fees will apply. Note: judgments must be paid off per Online HUD Handbook 4155.

Any information changes .FreddieMac. Enter or confirm the Reference Number(s). Look for any changes to the risk class and documentation level. sales price or terms and conditions of the mortgage. If the name of your CRC does not appear in the Credit Reporting Company field (and if applicable technical affiliate. FHA page. technical affiliate) if critical borrower data changes. if applicable Note: If no Reference Number(s) are provided. technical affiliate) is selected.FreddieMac. 4 5 Submit the mortgage for assessment. Loan Application Data pages. the loan application will receive an Incomplete response and messages instructing you to enter the required information. Review and update merged credit selections.pdf for more information on using the merged credit options. select your CRC (and if applicable. as well as the detailed feedback messages for any changes that would impact the processing and underwriting of the mortgage.com/learn/ Page 22 . and ARM page (if applicable). then merged credit may automatically be re-pulled from the CRC (or if applicable. Enter or confirm the correct report type is selected in the Single or Joint report type field 5. The Credit Reporting Company (and if applicable. Perform the following steps if you need to resubmit an FHA loan application: Process for Resubmitting an FHA Mortgage Step 1 2 3 Action Select the FHA loan application to be resubmitted and click Modify Loan. a new CRC (or if applicable. Review the assessment results. There is a critical borrower(s) data change or addition/deletion of borrower(s) To include the FHA Case Number if not already entered on a prior submission. Merged Credit fees will apply and be billed directly from the CRC.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond The Credit Alert Interactive Voice Response System (CAIVRS) authorization shows a Federal Delinquency/Lien for any borrower.including decreases to a borrower’s income. technical affiliate) from the pull down list 4. Select Merged Credit so the credit report option fields appear 3.com online help or Merged Credit Report Options quick reference at http://www. or credit report exceeds 120 days. Make any data changes required on the Loan File Setup page. assets and/or liabilities. technical affiliate) and Single or Joint report type fields must be completed on every resubmission regardless of access method. March 2010 www. If the information is not entered. Select Request Services on LoanProspector.com/learn/pdfs/uw/using_mc. Refer to the LoanProspector. The process for entering data in the fields may vary based on access type when you resubmit an FHA loan application: 1.com 2. joint or single merged indicator changes. There is a change to the property valuation.

enter "FHA TOTAL Scorecard" on line 19 of the 92900.1/4155. Ensure you have performed all of the following tasks before delivering a Loan Prospector FHA loan application: Place the FHA TOTAL Scorecard Full Feedback Certificate on the right side.2 at www. in lieu of a DE underwriter's signature Example 92900-A: X This mortgage was rated as an “accept” by a FHA-approved automated underwriting system. document and underwrite as a Refer risk class An FHA DE underwriter must sign the HUD 92900-LT form.com/learn/ Page 23 .Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Requirements for Preparing a Mortgage for Delivery to FHA For FHA mortgages. . of the FHA endorsement binder If Accept risk class. As such.fhaoutreach. enter “ZFHA” as CHUMS ID on the HUD 92900.gov/FHAHandbook/prod/index.4 Mortgagee Representative: _______________________________________________________________ John Smith FHA TOTAL Scorecard FHA-Approved Automated Underwriting System: ________________________________________________________________ If Accept risk class. but there exists a condition where you must reclassify.FreddieMac. that a Direct Endorsement Underwriter reviewed the appraisal (if applicable) and further certifies that this mortgage is eligible for HUD mortgage insurance under the Direct Endorsement program. March 2010 www. A DE underwriter’s signature or CHUMS ID is not required on the following FHA Forms: • • 92900-LT 92900-A Accept risk class. I hereby make all certifications required for this mortgage as set forth in HUD Handbook 4000. obtain an FHA Mortgage Insurance Certificate through HUD according to the requirements in the Online HUD Handbook 4155. the undersigned representative of the mortgagee certifies to the integrity of the data supplied by the lender used to determine the quality of the loan. top sheet. Obtain data integrity certification from a representative of the mortgage company as follows: .Refer – DE underwriter must provide signature and CHUMS ID on FHA Form 92900-LT or 92900-A.Accept – Sign the “Accept” box and put “FHA TOTAL Scorecard” as the FHA-approved Automatic Underwriting System on page 3 of the 92900-A (revised March 1998).asp. Following is a summary of the requirements: If a loan application receives … Refer risk class Accept risk class Then… An FHA-approved Direct Endorsement (DE) underwriter must sign the HUD 92900-LT form.

including functionality and feedback messages may be directed to Freddie Mac Customer Service: Lenders: 800-FREDDIE (800-373-3343) Brokers: 888-LP-ON-WEB (888-576-6932) For the latest updates and changes from FHA regarding their policies and regulations. and Mortgagee Letter 2008-16.gov March 2010 www.1/4155.FreddieMac.hud.fha. 2004. dated January 6.hud. all located at http://www. dated June 11. FHA’s Technology Open To Approved Lenders (TOTAL) Mortgage Scorecard User Guide.cfm.gov/FHAHandbook/prod/index.asp. Mortgagee Letter 2004-01.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Additional Resources Questions related to the FHA TOTAL assessment through Loan Prospector.2 at www. 2008.gov/ FHA’s Resource Center at 800-CALLFHA (225-5342) Online HUD Handbook 4155.gov/offices/adm/hudclips/index.hud.cfm HUD website located at http://www. refer to their HUDCLIPS website at http://www.com/learn/ Page 24 .gov/offices/adm/hudclips/index.fhaoutreach. Questions regarding FHA credit policy and underwriting requirements may also be directed to: Sponsoring lender FHA Direct Endorsement Underwriter FHA’s frequently asked questions at http://faq.

Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Summary Following are the key points for FHA loan applications assessed by FHA TOTAL through Loan Prospector: Underwriting and documentation requirements are streamlined for FHA Accept risk class loan applications assessed by FHA TOTAL through Loan Prospector due to the waivers received for verifying income/employment. the lender is responsible for the credit and ratio warranties. and assets. FHA’s TOTAL Mortgage Scorecard User Guide or VA Lender's Handbook.fhaoutreach. and/or terms of your Master Agreement and/or Master Commitment. March 2010 www.1/4155. If the loan has not been assessed with corrected credit.asp. Loan Prospector Functionality Guide. This document is not a replacement or substitute for the requirements set forth in the Single-Family Seller/Servicer Guide (Guide). For FHA loan applications that receive a Refer risk class. Online HUD Handbook 4155. you may use the Reorder Credit Service to request fresh merged credit and an assessment. ratios. If the merged credit reports obtained through Loan Prospector contain significantly inaccurate information and the credit has been corrected at the repositories.com/learn/ Page 25 .gov/FHAHandbook/prod/index.FreddieMac. reclassify the FHA loan application to a Refer risk class.2 at www.

gov/ Vertical revision bars " | " are used in the margin to highlight new requirements and significant changes. March 2010 www. (November 17. The Department of Veterans Affairs then guarantees the VA mortgages.homeloans. Objectives Some requirements for processing VA loan applications differ from those of conventional/conforming loan applications.va.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond VA Loans Introduction The Department of Veterans Affairs (VA) Freddie Mac allows Loan Prospector automated underwriting service to assess VA loan applications.com/learn/ Page 26 .FreddieMac. After completing this section. you will be able to: Use Loan Prospector to assess VA loan applications Explain the credit and documentation waivers available when using Loan Prospector to assess VA loan applications Define the Accept and Refer risk classes for VA loan applications Document a VA loan application using Accept and Refer documentation requirements For additional VA information refer to: Pamphlet 26-7 Change 34. 1997) VA website at http://www.

new construction loans can be assessed by Loan Prospector. 5-.FreddieMac. However. March 2010 www. You must be an approved lender to use Loan Prospector for VA loan applications and be an approved VA Automatic lender. you must have certain agreements and approvals in place. Mortgage Eligibility Requirements Loan Prospector assesses and determines eligibility for VA guaranty for the following: 15-. Loan Prospector does the following: Determines eligibility for assessment Assesses borrower credit reputation Assesses risk profiles Standard VA Processes Assessing VA loans with Loan Prospector allows you to process more VA loan applications in less time with less work than manual underwriting. and 10-year Hybrid ARM loans In addition. Refer to Loan Prospector – How to Enter Mortgages for Newly Constructed Homes reference for information on entering VA new construction loans in Loan Prospector. The assessment Loan Prospector performs is in accordance with VA requirements. and 30-year fixed-rate loans VA 1-year ARM loans 3-. 20-. the following VA standard processes remain the same when assessing VA loan applications with Loan Prospector: Obtaining VA case number Obtaining Credit Alert Interactive Voice Response System (CAIVRS) authorization Ordering appraisals Determining whether a condominium or PUD has VA approval Verifying a veteran’s status and establishing full or partial entitlement Obtaining VA Certificate of Eligibility Determining maximum allowable financing Determining VA funding fee Refer to your local VA field office or the VA Lender’s Handbook for more information on these standard processes. Specifically. 7-.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Lender Requirements Before processing VA loan applications through Loan Prospector.com/learn/ Page 27 .

Number of people meeting definition of household size. according to the VA Lender’s Handbook. according to the VA Lender’s Handbook. This is typically the number of people for whom the Veteran is responsible. Monthly balance of funds available for family support after meeting borrower’s shelter expenses. and taxes. Zip code of property being financed. debts. If a CAIVRS authorization indicates a Federal Delinquency/Lien. Loan Prospector requires certain data for VA loan applications: Field Name Eligible Veteran Federal Delinquency/Lien Description Flag indicating if a borrower qualifies as Veteran under VA guidelines.com/learn/ Page 28 . “Yes.FreddieMac. indicate. without dashes.” Dollar amount of FHA Up-front Mortgage Insurance Premium or VA Funding Fee that is rolled into the loan amount.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Required Data for VA Loans In addition to the data required for all loan application types. The VA-assigned case number for VA loans. The number is used by VA to identify the loan. State location of property being financed. Indicates if borrower is currently delinquent or in default on a federal loan. Financed MIP/Financed Funding Fee Property State Property Zip Code A Case Number (optional) VA Household Size VA Residual Income March 2010 www.

Results If you have questions regarding the field.FreddieMac.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond How to Enter Data for VA Loans The following information provides the navigational steps for entering VA loan data in Loan Prospector: Step Login and enter loan data on the Loan File Setup and Loan Application Data pages. Click Next. click the field label to access online help. Enter all the remaining required loan data and click Next to access the VA page. Enter the VA-specific data on the VA page.com/learn/ Page 29 . Select ‘VA’ for the Mortgage Type field. The VA data page displays: March 2010 www.

Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Step Click Submit.FreddieMac. Results The Request Services page displays with Automated Underwriting selected: March 2010 www.com/learn/ Page 30 .

When prompted. the Correct Errors page displays. use the Find Loans feature on the Loan Prospector Main page to access the loan and view results. If you have not viewed the results within 14 days. Accessing VA Results After submitting the mortgage for assessment. Loan Prospector returns the following results: Full Feedback Certificate Documentation Checklist Infiles or Merged Credit Report(s). the Confirm Submission page displays. Results When no data entry errors are detected. Once the loan is selected. you have two options: Wait for the results to display (approximately 2 minutes) View the results later using the Unviewed Results option A message displays confirming loan submission.FreddieMac. Based on the assessment performed. If data errors are detected. otherwise you may access results later using the Unviewed Results option on the left navigation bar for up to 14 days.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Step Click Confirm Submit to submit the mortgage for a VA assessment. if you decide to wait for the results. they will display automatically.com/learn/ Page 31 . follow the online instructions to correct errors. from the CRC or participating technical affiliate March 2010 www. a list of available results documents will display in the left navigation bar under the View Results section. After confirming the submission. if requested.

Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Step Results Upon a successful submission.FreddieMac.com/learn/ Page 32 . the Full Feedback Certificate displays as follows: March 2010 www.

Once merged credit data has been accessed it is no longer accessible from the navigation bar after 7 days unless the mortgage is resubmitted. It is the lender's responsibility to ensure all such guidelines are met. and underwriting and documentation requirements for the VA loan. just like conventional and FHA loans. processing and documentation information for the transaction. or 180 days if new construction. the following new message will be returned: “LP . Risk Class and Documentation Level Loan Prospector will return a risk class indicating the level of risk identified. The information provided on the Full Feedback Certificate and Doc Checklist for VA loans is in the same format as the results for conventional loans. The Full Feedback Certificate provides guidance regarding the documentation and underwriting requirements for VA mortgages.com/learn/ Page 33 . then the loan data must be resubmitted. If you need to view your merged credit reports after 7 days. Also. Descriptions for the VA risk classes and documentation classes are provided in the following table: March 2010 www. For example.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Accessing Merged Credit Reports If requested.FreddieMac. merged credit received from the CRC or participating technical affiliate can be selected from the left navigation bar. A small reissue fee may be assessed by the CRC on your monthly CRC invoice. If the loan is for new construction. including merged credit.FreddieMac. Please refer to the VA Lender's Handbook for additional information”. Loan Prospector will also return a documentation level indicating the minimum level of documentation the Seller must obtain for the VA loan. In some cases. Purchase Restrictions Purchase Restriction message(s) returned on the Full Feedback Certificate provides the reason(s) a loan may not be acceptable for VA guaranty. you will receive specific messages if a loan application does not meet: VA’s requirements for the loan program VA’s requirements for loan-to-value (LTV) Understanding the Results To be eligible for delivery to VA. you will receive results providing important data. use the merged credit reference number and resubmit the loan to refresh the existing merged credit report. Reviewing Results Each time you successfully submit a loan to Loan Prospector.pdf. the results. are valid for 120 days prior to the Note Date or 180 days if new construction. the loan file must be documented according to the streamlined guidelines VA established for loan applications assessed by Loan Prospector. If the results are not dated within 120 days of the Note date. It is recommended that you print the merged credit results and place them in the loan file for future reference. You may also want to refer to the FHA TOTAL Mortgage Scorecard and VA Documentation Matrix located at http://www. responsibility for credit representations and warranties.com/learn/pdfs/uw/total_matrix. you may need to contact VA for specific credit policy-related questions and situations not addressed in the results.Review for Accuracy: VA underwriting and appraisal guidelines vary for Proposed/Under Construction loans.

Refer VA determines the residual income requirement according to the Property State you submit to Loan Prospector.com/learn/ Page 34 . Credit For VA loan applications receiving an Accept risk class. even though the residual income may below the figures shown on the chart in the VA Lender’s Handbook. the lender is not responsible for representations or warranties related to determining borrower credit reputation. For VA loan applications receiving a Refer risk class. Representations and Warranties VA loan applications receiving an Accept risk class benefit from relief of certain lender representations and warranties as described in the following paragraphs. The Refer credit warranty message states: LOAN PROCESSING INFORMATION -----------APPLICABLE CREDIT WARRANTIES AND WAIVERS-------VY Credit Warranty: Required to determine that the borrower shows the willingness and financial ability to pay. and VA agrees to guarantee the loan. and accurate and the entire mortgage package meets VA requirements.FreddieMac. The Accept credit warranty message states: LOAN PROCESSING INFORMATION ----------APPLICABLE CREDIT WARRANTIES AND WAIVERS--------VX Credit Warranty: Not required to determine borrower shows the willingness to pay. standard documentation requirements are available for these loans. If Loan Prospector returns a Refer risk class. the borrower’s credit reputation and capacity are acceptable to VA. due to the overall characteristics of the loan data and the borrower. You must determine the borrower’s willingness to repay and that the loan file contains evidence of an acceptable credit reputation. provided the data is true. Documentation Level Accept Refer If Loan Prospector returns a documentation level of Accept. according to the VA Lender’s Handbook. complete.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Risk Class Accept If Loan Prospector returns a risk class of Accept. In some cases. it is possible to receive an Accept risk class. For VA loans. You can verify the residual income you submitted to Loan Prospector in the Loan Processing Information section on the Full Feedback Certificate. If Loan Prospector returns a documentation level of Refer. a VAAutomatic Approved lender must analyze the application to determine if the mortgage qualifies for VA guaranty. it has identified weaknesses in the borrower’s credit reputation and/or capacity that require further assessment. it allows you to take advantage of substantially fewer documentation requirements than traditionally underwritten VA loans. March 2010 www. the lender is responsible for representations or warranties related to determining borrower credit reputation.

the applicant must contact the agency reporting the issue and resolve it in order to be eligible for VA guarantee. close the loan and submit for VA guarantee. If you receive a CAIVRS authorization for any borrower showing a delinquent obligation or claim payment. You or the VA Automatic Underwriter. including the use of adverse actions notices. Regardless of the risk class. CAIVRS VA Accept risk class loan applications are subject to Credit Alert Interactive Voice Response System (CAIVRS) authorization for all borrowers showing no delinquent obligation or claim payment. you will need to resubmit. CAIVRS is a system used to check applicants for defaults in government-backed loans (i. The following messages may be returned on the Full Feedback Certificate: CREDIT INFORMATION -----------APPLICABLE CREDIT WARRANTIES AND WAIVERS-------F1 CAIVRS Warranty: CAIVRS authorization for all borrowers must not indicate a delinquent obligation/claim payment.. ensure that the data field for Federal Delinquency/Lien is marked “Yes” and resubmit the loan. make the lending decision. The Accept ratio warranty message: LOAN PROCESSING INFORMATION ----------APPLICABLE CREDIT WARRANTIES AND WAIVERS----V9 Ratio warranty: Not required to determine if the borrower’s monthly housing and monthly debt ratios meet program requirements.e. assess the borrower(s) credit reputation if required. should be directed to the lender. you will proceed with review of the appraisal. The Lending Decision Once you’ve validated the necessary data and results.com/learn/ Page 35 . The Refer ratio warranty message in our AUS states: LOAN PROCESSING INFORMATION ----------APPLICABLE CREDIT WARRANTIES AND WAIVERS----VZ Ratio warranty: Required to use the debt ratio as a guide to determine whether or not the loan will be granted. the lender is not responsible for determining whether the borrower’s monthly housing payment-to-income ratio and monthly debt-to-income ratio are acceptable to VA.FreddieMac. You also may be required to reclassify the loan to a Refer risk class. The lender retains all authority to make the lending decision. must determine all borrowers have a clear CAIVRS number. as applicable. March 2010 www.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Ratios For VA loan applications receiving an Accept risk class. Any issues or questions regarding granting or denying credit. student loans and FHA or VA loans). You may also be required to reclassify to a Refer risk class. the lender is responsible for determining whether the borrower’s monthly housing payment-to-income ratio and monthly debt-to-income ratio are acceptable to FHA. If an applicant has a credit alert status problem. For VA loan applications receiving a Refer risk class.

FreddieMac.com/learn/pdfs/uw/fun_guide. Document all borrowers' credit reputations according to the VA Lender’s Handbook for VA loan applications. The credit data does not contain a reference for each significant open debt listed on the loan application The credit data has accounts listed as "will rate by mail only" or "need written authorization" The loan data receives a Refer risk class from Loan Prospector The VA Automatic underwriter must base the assessment of the borrower’s credit reputation on the borrower’s entire credit history as outlined in the VA Lender’s Handbook.com online help or Loan Prospector Functionality Guide at http://www. If the inaccurate information has been corrected at the repositories. The following table provides some of the typical recurring issues and required actions associated with documenting credit information for VA loans assessed by Loan Prospector. Document the loan file according to Loan Prospector reduced documentation requirements for Refer risk classes. Include any debts resulting from credit inquiries in the past 90 days in the total monthly debt you report to Loan Prospector. Refer to the LoanProspector. If incorrect identifying or significantly inaccurate information still exists. If… The credit reports you are using to make your lending decision contain incorrect borrower identifying information for any of the following: Name Social Security Number The loan receives an Accept risk class from Loan Prospector. and The credit report has not been updated in 90 days Re-verify the debt to determine current status. March 2010 www. Obtain a separate written verification for each significant debt reported on the application but not verified on the credit data. manually reclassify the loan application to Refer. you may use Loan Prospector’s optional Reorder Credit Service to request fresh credit for individual borrowers or joint borrower pairs. Obtain a separate written verification for each applicable account. but the credit data contains incorrect identifying or significantly inaccurate information.freddiemac.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond How to Document Credit Information The VA Lender's Handbook for VA loan applications provides detailed guidance for underwriting and documentation.com/learn/ Page 36 . The VA Automatic underwriter concludes that the borrower’s credit reputation is acceptable despite significant adverse or derogatory information The credit data shows that an existing mortgage or significant debt is past due.pdf for information on using this service. Then… Enter the correct information into Loan Prospector and request the assessment again. and Order a triple-merged credit report or RMCR or independent thirdparty information to clarify the inaccuracy.

If you resubmit a new construction loan. including: The final risk class and documentation class is greater than 120 days from the Note Date. Refer Risk Class: Underwrite and document the loan file to the Refer risk class and documentation requirements. If using merged credit. The credit data results are greater than 120 days from the Note Date. including a change in borrower order on a joint merged credit request Non-matching reference number Credit freshness expiration Secondary submission error Each submission. The Credit Alert Interactive Voice Response System (CAIVRS) authorization shows a Federal Delinquency/Lien for any borrower. Any credit or ratio waivers listed on the Full Feedback Certificate are invalid. or 180 days if new construction.e. You may use the Reorder Credit Service to obtain new merged credit. regardless of loan type. All other loan applications. Loan Prospector will automatically obtain new credit infiles if any critical data changes are detected upon resubmission.including decreases to a borrower’s income.). credit will be re-accessed unless any of the following conditions have occurred: Change in loan type Change in specified CRC or technical affiliate Change in joint merged credit borrowers Change in merged credit transaction request type Change in borrower data. critical borrower data and submitting entity after the first 120 days to maintain the same credit data for 180 days.You must obtain new merged credit if any critical data changes (i. .com/learn/ Page 37 . etc.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond If… The credit data shows that an existing mortgage or significant debt is greater than 90 days past due and Credit report is up-to-date Then… Accept Risk Class: Reclassify the risk class to Refer.. regardless of the number of services requested. You may need to resubmit your VA loan application for a variety of reasons at some point in your process. counts once toward the transaction limit. or 180 days if new construction. change in Joint merged indicator from single to joint or vice-versa. Document according to Refer documentation guidelines. you must keep the same CRC (and if applicable. If using merged credit data: . assets and/or liabilities. Credit data contains derogatory information Modifying and Resubmitting VA Loans You may resubmit a loan application to VA up to 15 times without incurring an additional assessment fee. New merged credit fees will apply. change in CRC or technical affiliate. March 2010 www.FreddieMac. All Loan files: No explanation of derogatory credit is required for any loan receiving an Accept risk class. If using credit infiles. Note: Judgments must be paid off or subject to a timely repayment plan per the VA Lender’s Handbook. Any information changes . require a written explanation from the borrower. technical affiliate).

FreddieMac. There is a change in borrowers. An underwriter’s certification or signature is not required on VA Form 6393. the undersigned lender. document and underwrite as a Refer risk class March 2010 www. sales price or terms and conditions of the mortgage. For additional information on modifying and resubmitting loans. but there exists a condition where you must reclassify. Accept risk class.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond There is a change to the property valuation. At least one of the original veteran borrowers must remain. or the loan application is considered a new application. along with a copy of the Feedback Certificate indicating the risk class. hereby certify that case number (insert VA loan number) was processed through Loan Prospector and received an “Accept” rating.com/learn/ Page 38 . Lenders must complete the following certification: I. A Mortgagee representative must sign and submit this certification to VA. refer to the Loan Prospector Functionality Guide located at http://www.FreddieMac. VA Automatic Underwriter must sign VA Form 6393. obtain a VA guaranty through submission of the mortgage file to VA according to the requirements in the VA Lender’s Handbook. Requirements for Preparing a Mortgage for Delivery to VA For VA mortgages. I further certify that all information entered into the system has been verified and that any credit discrepancies have been reconciled. Following is a summary of the requirements: If a loan application receives… Refer risk class Accept risk class Then… A VA-approved Automatic Lender must submit the loan data.pdf.com/learn/pdfs/uw/fun_guide.

ratios. For VA loan applications that receive a Refer risk class. and assets. the lender is responsible for the credit and ratio warranties.FreddieMac.1/4155. This document is not a replacement or substitute for the requirements set forth in the Single-Family Seller/Servicer Guide (Guide). If the credit report contains significantly inaccurate information. reclassify the VA loan application to a Refer risk class. HUD Handbook 4155. and/or terms of your Master Agreement and/or Master Commitment.2. March 2010 www. Loan Prospector Functionality Guide.Type title in theFHA TOTAL and VA Mortgages (Arial 12 point type) Processing header for pages two and beyond Summary Following are the key points for VA loan applications: Underwriting and documentation requirements are streamlined for VA Accept risk class loan applications assessed by Loan Prospector due to the waivers received for verifying income/employment.com/learn/ Page 39 . FHA’s TOTAL Mortgage Scorecard User Guide or VA Lender's Handbook.

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