FHA Single Family Housing Policy Handbook 4000.1, Part V

ii. Document Review and Reverification A Mortgagee’s QC Plan for origination and underwriting must provide for the review and reverification of the following information on all FHA-insured Mortgages selected for pre-closing and post-closing review, unless otherwise specified below.

(A) Credit Report (1) Standard For all post-closing reviews, the Mortgagee must obtain a new credit report in the same form as the original credit report used to approve the Mortgage, including a Residential Mortgage Credit Report (RMCR), a Tri-Merged Credit Report (TRMCR), or, when appropriate, a business credit report for each Borrower whose FHA-insured Mortgage is selected for review. The new credit report must comply with the credit report standards described in the Credit Report(s) section. The Mortgagee must compare the new credit report obtained with the original credit report used to approve the Mortgage, and determine whether any discrepancies exist between the reports that may adversely affect the Borrower’s eligibility to qualify for an FHA-insured Mortgage. If discrepancies exist between the credit reports that may adversely affect the Borrower’s eligibility to qualify for an FHA-insured Mortgage, then the Mortgagee must obtain a second, full RMCR. (2) Exceptions A new credit report does not have to be obtained for pre-closing reviews, or for non-credit qualifying Streamline Refinances. (3) Required Documentation The Mortgagee must retain a copy of the new credit report(s). V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE A. Quality Control of Lenders and Mortgagees 3. Loan Level Quality Control Program Requirements

(B) Income, Employment, Asset, and Housing Expense Information (1) Reverification (a) Standard For all post-closing reviews, the Mortgagee must analyze the validity and sufficiency of all documents contained in the loan file. The Mortgagee must reverify, in writing or electronically if available, the following: • employment; • income; • assets; • gift funds; • source of funds; and • Mortgage Payments or rental payments. If a written or electronic reverification request is not returned to the Mortgagee, the Mortgagee must attempt a telephone reverification. Reverification is not required for pre-closing reviews. (b) Required Documentation The Mortgagee must retain evidence of the written, electronic, or telephone verification, and document the due diligence. (2) Discrepancies (a) Standard The Mortgagee must evaluate all discrepancies to ensure that the original documents (except blanket verification releases) were completed before being signed, were as represented, were not handled by Interested Parties, and that all corrections were proper and initialed. All conflicting information in the original documentation must be resolved with the underwriter. Discrepancies in documentation discovered during pre-closing reviews must be resolved prior to closing. (i) Exception for Mortgagees and Third-Party Originators The Mortgagee and TPO are permitted to handle reverifications, provided the Mortgagee or TPO is not the seller, real estate agent, builder, or developer. (b) Required Documentation The Mortgagee must document any discrepancies and retain copies of information used to resolve such discrepancies. V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE A. Quality Control of Lenders and Mortgagees 3. Loan Level Quality Control Program Requirements

(C) Property and Appraisals (1) Standard (a) Property and Appraisal Reviews For all FHA-insured Mortgages selected by the Mortgagee for origination and underwriting QC review, the Mortgagee must evaluate all Property documentation and the appraisal report used to support the Property Value and eligibility for FHA insurance. At a minimum, the Mortgagee must review all Property documentation and the appraisal report for completeness, technical accuracy, and overall quality in compliance with Property Acceptability Criteria for forward Mortgages, Property Acceptability Criteria for Reverse Mortgages, and Appraiser and Property Requirements for Title II Forward and Reverse Mortgages. The Mortgagee should use valuation tools, Automated Valuation Models (AVM), multiple listing service data, public records data, and any other appropriate methods to identify potential valuation errors or other compliance issues. (b) Field Reviews The Mortgagee may obtain appraisal field reviews if needed to adequately access the appraisal report for compliance with all applicable requirements. Field reviews must be performed by Appraisers listed on the FHA Appraiser Roster and must be reported on the applicable Residential Appraisal Field Review Report form or report. (2) Exception [Text was deleted in this section.] Mortgagees are not required to perform the property and appraisal QC review for Streamline Refinances where the Mortgagee was not required to order a new appraisal for a Property financed with an FHA-insured Mortgage. (3) Required Documentation The Mortgagee must retain all results from the property and appraisal QC reviews required by this section, including any reports from valuation tools or appraisal field reviews. Results include all selection criteria, review documentation, Findings, and actions taken to mitigate Findings. V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE A. Quality Control of Lenders and Mortgagees 3. Loan Level Quality Control Program Requirements

(D) Title I Loan Disbursement (1) Standard For all QC post-closing and Early Payment Default (EPD) reviews of Title I Insured Programs- Manufactured Home Loan Program and Property Improvement Loan Program, the Title I Lender must determine that the Disbursement of loan proceeds was adequately documented in the case binder and the Disbursement was completed in accordance with FHA requirements. The Title I Lender must also determine that Disbursements to a Borrower or Dealer were made in accordance with FHA requirements. (2) Required Documentation The Title I Lender must document any discrepancies and retain copies of information used to resolve such discrepancies.