FHA issued recently Mortgage letter 2021-17 (ML 2021-17) announcing updates to certain Quality Control (QC) review requirements in Single Family Home Policy Manual 4000.1 (SF Handbook 4000.1), Section VA3.c.ii (C), including the expiration of a COVID-19 temporary partial waiver these requirements.
The provisional partial waiver that was originally announced in June 2020 and extended Tries in December 2020 to temporarily give mortgage creditors flexibility over QC field reviews of ratings due to the COVID-19 pandemic. The waiver allowed mortgage holders to use third-party tools as an alternative to field reviews of ratings, but required mortgage holders to continue to meet all other evaluation QC requirements in SF Manual 4000.1
The updates announced in ML 2021-17 include a change to the requirement in SF Manual 4000.1, Section VA3 (C) (1) (b) to review the Assessment Field to reflect the percentage of early payment defaults (EPDs) that an assessment require reducing field testing from 100 percent of EPDs to just 10 percent. In addition to other revisions, ML 2021-17 also strengthens additional criteria for the selection of spot checks and clarifies that mortgage creditors must review all property documentation and the valuation report for compliance with the requirements of SF Manual 4000.1.
The updates announced in ML 2021-17, including the expiration of the temporary partial waiver, went into effect for mortgages selected for QC review on and after July 1, 2021.