Are you looking for a house to buy in the new year? If you are new to house hunting and the home loan process in general, you won’t notice the changes coming to FHA loan paperwork in 2021, but you’ll definitely be affected by the changes.
The FHA and HUD issued a press release in late 2020 announcing the publication of a revised Form HUD-92900-A, (92900-A) HUD Addendum to Uniform Residential Loan Application (URLA). The revisions change certain consent forms, remove a requirement for new construction, and modify other aspects of the home loan process for FHA mortgages.
The modifications are applied to documents considered typical for the FHA home loan process. Why are they changing? The move is part of a process dictated by something the FHA and HUD refer to in the press release called the Housing Finance Reform plan.
The new forms are meant “to provide clarity and certainty to its program participants while also managing risk to the Mutual Mortgage Insurance Fund.”
The government felt such revisions (see below) were necessary to “better reflect regulatory and other legal requirements, ensure accuracy of information provided to FHA and reduce uncertainty in the industry”
We’ll look at the changes to these loan documents in a moment but there is one removal worth mentioning; the FHA and HUD have modified HUD 4000.1, the FHA Lender’s Handbook, with respect to minimum property standards for new construction properties.
The modified section is found in HUD 4000.1: New Construction –Completion of Construction (II.A.8.i.viii) before its removal. That section stated:
“Regardless of the inspection process used, the Mortgagee must certify on form HUD-92900-A, HUD/VA Addendum to Uniform Residential Loan Application, that the Property is 100 percent complete and meets HUD’s MPR and MPS.”
This section will no longer be found in HUD 4000.1 and you should definitely ask your loan officer if you have a construction loan or want to apply for a One-Time Close construction mortgage and aren’t sure how this rule change might affect your transaction.
The other changes? They vary. Going forward the FHA and the U.S. Department of Veterans Affairs (VA) have discontinued sharing the 92900-A; pages one and two of that document now obtain consent from the borrower “to verify their social security number and provide important disclosures such as the Public Reporting Burden as well as others”.
A warning about false certifications is added to the first page;
In the modified version, page three now requires certifications “consistent with 24 CFR 203.255(b) from the Mortgagee representative and the Direct Endorsement (DE) Underwriter for the appraisal when the mortgage receives an approval from FHA’s TOTAL Mortgage Scorecard, and DE Underwriter for manually underwritten loans”.
The changes also require a post-closing certification from the Mortgagee representative prior to submission of the loan to FHA for insurance endorsement.
The use of Form 92900-A is required by 24 CFR 203.255(b) and 24 CFR 206.115 “for all Single Family Forward Mortgages and Home Equity Conversion Mortgages (HECM)” according to the FHA and HUD official sites.
The immediate use of the new forms is approved but becomes mandatory in March of 2021.