Updates to FHA Single Family Housing Policy Handbook Published

The Federal Housing Administration (FHA) recently published an updated version of its Single Family Housing Policy Handbook 4000.1 (Handbook).  The Handbook is the source of information for FHA lending entities.

Among other things, the Handbook has been revised in the following ways:

• It clarifies that a quality control plan is required for an “investing mortgagee” application in certain circumstances;
• It confirms that appraisers must comply with antidiscrimination laws;
• Appraisers now must state certain facts about the property, such as that the attic or crawl space is not safely accessible and that (if necessary) a qualified third party must do the inspection to determine compliance with certain programs;
• Any property in a Special Flood Hazard Area must be eligible for coverage under the National Flood Insurance Program, regardless of whether the borrower obtains such coverage;
• The requirements for private flood insurance are described;
• There is additional guidance on underwriting regarding the positive rental payment history of a first-time homebuyer; and
• The effective income standards include COVID-19 related income event exceptions.

FHA-approved mortgagees may implement the Handbook’s full changes immediately.  All changes must be implemented by April 18, 2023, except changes in Section II.A, which must be implemented for case numbers assigned on or after April 18, 2023.  There is a thirty-day feedback period provided for any comments on the updates, which ends on February 17, 2023.