FHA Manual Underwriting
In this course, you'll learn about manual underwriting requirements that are unique to the FHA loan product. This course describes the procedures for evaluating the credit history and the borrower's capacity to make payments, and whether sufficient cash assets are available to close the mortgage in accordance with FHA 203(b) program requirements. It provides the requirements on the types of income that may be considered in qualifying the borrower, the liabilities that must be included in determining creditworthiness and the debt-to-income ratios, and compensating factors use in the underwriting process. These underwriting instructions are FHA's 'base-line' credit policies for manual underwriting.
At the end of this course you will be able to:
- Describe how to analyze credit worthiness on past credit
- Explain Short Sales and Short Pay Offs
- Describe how to document the source of funds
- Explain how to estimate effective income
- Describe how to compute liabilities
NOTE: For those lenders using FHA-approved Automated Underwriting Systems (AUS) or those employing FHA's TOTAL mortgage scorecard, there will be a considerable number of revisions to these policies, including documentation requirements, as described in the TOTAL Scorecard Guide, the handbooks, and FHA mortgagee letters.