Bulletin 2021-114 FHA Overlay Removals and Updates (2024)

FHA Transactions Overlay Removals and Guideline Updates

Topic

Current Guideline

New Guideline

Product Profile Updates

Purchase

AUS Approve/Accept

• CLTV: 100%

AUS Approve/Accept

• CLTV: 105%

Refinance

Manual Underwrite

Rate and Term & Simple Refi

• Credit score: 620

Cash-out Refi

• Credit score: 640

Manual Underwrite

Rate and Term & Simple Refi

• Credit score: 600

Cash-out Refi

• Credit score: 600

Streamline Refinance

• Credit Score: 640
• LTV/CLTV: Unlimited

• Credit Score: 580
• 105%/125% LTV/CLTV
• No change for manufactured housing

Housing Payment History
Forbearance

Streamline Refi Non-Credit Qualify

• Borrowers with a forbearance must have exited forbearance and made three (3) payments within the month due

Streamline Refi Non-Credit Qualify

Non-Delegated Clients

• Borrowers with a forbearance must have exited forbearance and made six (6) payments within the month due

Delegated Clients: Follow FHA policy

Tax Transcripts

Required for self-employment and income documented with tax returns prior to closing

Removed requirement for tax transcripts prior to closing

FHA Transactions Overlay Removals and Guideline Updates

Topic

Current Guideline

New Guideline

FHA Underwriting Guide

R-1 Religious Worker
Chapter 2A Eligibility

Not allowed

Allowed

Ineligible Property Types
Chapter 2D Property Types

Silent

3D printed homes are not allowed

Disaster Relief Grants
Chapter 2G Assets

Silent

Added guidance for disaster relief grants

Cryptocurrency
Chapter 2G Assets

Not permitted

Cryptocurrency is not an eligible asset; however, proceeds from the liquidation of cryptocurrency may be eligible for down payment, closing costs or reserves.

Joint Access Letter
Chapter 2G Assets

Joint Accounts require an access if the parties are unrelated, or the spouse is not on the loan.

Removed requirement

Mortgage Credit Certificates

Chapter 3I Employment and Income

Not permitted

Permitted. Payment must be made to the borrower and not the servicer.

Marijuana Related Businesses and Hemp

Chapter 3I Employment and Income

Not permitted

Federal, state, and local laws restrict marijuana related activities therefore income or assets from these sources are not allowed for qualifying purposes.

Hemp income or assets derived from Hemp may be eligible in states where Hemp is legal. The borrower must:

• Provide a written attestation by the hemp grower that they are validly licensed, or
• Obtain a copy of such license.

Hemp income and/or assets are eligible in all states except the following:

• Washington, D.C.
• Idaho
• Mississippi

Appraisal Integrity and Conduct
Chapter 2J Appraisal

NA

Added guidance per Mortgagee Letter 2021-27

Nondiscrimination Policy
Chapter 2J Appraisal

NA

Added guidance per Mortgagee Letter 2021-27