LoanLogics Unveils Online Reference Tool Designed to Help Lenders Comply With New FHA Lending Guidelines
Trevose, PA | September 17, 2015 Trevose, PA., September 17, 2015-- LoanLogics, a recognized technology leader in loan quality management and performance analytics, has created a free interactive, online mortgage industry resource for lenders that have to comply with dozens of updated Federal Housing Administration lending guidelines. "Take the Mystery Out of the Requirements Being Superseded by the FHA Handbook 4000.1. The Decoder Is No Longer Secret," offers FHA-approved mortgagees an easy-to-use, quick-reference tool that identifies the major substantive changes that took effect September 14, 2015.
This online tool helps lenders understand the major changes being implemented with the new FHA Handbook so they can incorporate them into their processes, policies and procedures. These changes were outlined in the Housing and Urban Development’s "4000.1: FHA Single Family Housing Policy Handbook: Doing Business with FHA, Origination through Post-Closing/Endorsement, Servicing and Loss Mitigation, and Quality Control, Oversight and Compliance."
"Over the past several months, I’ve worked with several lenders and participated in numerous FHA webinars and conference calls to identify the main requirements being superseded by the FHA Handbook 4000.1," said Gerry Glavey, SVP and Chief Credit Officer at LoanLogics and author of the guide. "I recognized that it would be helpful for lenders to have a quick reference, interactive tool they could consult to answer a question, verify an important detail, or ensure they have not missed some of the more significant changes within the handbook."
The purpose of the LoanLogics FHA Handbook 4000.1 online tool was to ensure that lenders had somewhere to go to answer their questions in a straightforward manner and have the information they need to understand how to comply with the new requirements. Also, it’s a resource that they can continue to reference now that the changes are in effect. Feedback from Lenders has been very positive as they have begun to share the online tool with staff as a "go-to" reference tool.
"Without question, lenders face an uphill battle getting their staff trained on the new handbook as well as understanding the new procedures, but this reference tool will shorten the learning curve and improve their ability to achieve compliance," said Glavey, who worked for HUD/FHA for more than 30 years. Most recently, he served as the Director of the Processing and Underwriting Division in the Philadelphia HOC from 2000 to 2011.
Examples of some of the changes found in the interactive guide are:
- FHA will now require evidence of source of funds for an Earnest Money Deposit in excess of 1% of the sales price. The previous threshold was 2%.
- For recent deposits and recently opened accounts of more than1% of the Adjusted Value, the lower of the sales price or appraised value, the source of these funds must be documented. The previous threshold was 2% for recent deposits.
- For properties that have individual wells and septic tanks, the mortgagee must require that they be connected to a public or community system when it's feasible and the cost is reasonable. The FHA does not define what it means by a "reasonable cost." In the past, however, a reasonable fee for a hook-up to a public or community system was defined as 3% or less of the value of the property.
- Documents contained in the loan file cannot be older than 120 days at the time of the disbursement date. The previous threshold was not older than 180 days for new construction.
- Lenders are now required to process pre-closing reviews (no more than 10% of the monthly QC sample). Loan transactions that are selected for pre-closing reviews are required to be reviewed after the mortgage is approved by an FHA Direct Endorsement underwriter, and prior to the loan closing. Previously, HUD only recommended that lenders process pre-closing reviews, the timing of which was not regulated. To interact with this free online resource, go to: http://loanlogics.com/fha_handbook4000.1.html.
About LoanLogicsLoanLogics was founded ten years ago to improve the transparency and accuracy of the mortgage process, improve the quality of loans and reduce risk to industry participants. LoanLogics serves the needs of residential mortgage lenders, servicers, insurers, and investors that want to improve loan quality, performance and reliability throughout the loan lifecycle. It develops advanced solutions that help clients validate compliance, improve profitability, and manage risk during the manufacture, sale and servicing of loan assets. Achieving these goals was the motivation in the development of our Enterprise Loan Quality and Performance Analytics Platform. To learn more, visit www.loanlogics.com
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