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HUD Mortgagee Letter 2014-05: Standardized Multifamily FHA Mortgage Insurance Applications

 

Mortgagee Letter 2014-05

 

Issued:  February 28, 2014

 

Special Attention of

Approved MAP Lenders

 

Cross References

Housing Notice 2014-02

 

SUBJECT:  Standardized Multifamily FHA Mortgage Insurance Applications

 

I. Purpose

 

This Mortgagee Letter (“ML”) updates the Lender’s application submission templates for mortgage insurance under the Federal Housing Administration’s (FHA) Multifamily housing programs.

 

The following standardized documents are being implemented:

  • Underwriter’s Narrative (s)
  • Application Checklist (s)
  • FHA Summary Report

 

HUD’s goal in publishing new submission templates is to streamline its application process, standardize the Underwriter’s Narrative and update the application submission requirements to incorporate recent underwriting policy changes. HUD reviewed industry best practices and incorporated those standards into the new submission templates. This ML describes the updated application exhibits, the eligibility requirements and the process for submission of the processing exhibits. These application templates are for use for all multifamily FHA applications submitted under both Traditional Application Processing (TAP) and Multifamily Accelerated Processing (MAP) with the exception of Section 223(a)(7) applications. Further this L does not apply to health care programs administered by the Office of Healthcare Programs (Section 232 and 242, or refinancing of those sections pursuant to Sections 223(f), or the Risk-Sharing Programs (Section 542 (b) or 542 (c)).

 

II. Background

 

Lenders have been moving toward a standardized application approach consistent with industry practices. No new additional information will be required of the MAP approved Lenders. Based on prior experience, recommendations and examples reviewed from industry stakeholders, the Department has created standard templates for the FHA application submission process. 

 

By creating standardized underwriting forms and a more structured application format, HUD will be able to expedite the application review process for the Lenders and staff while reducing its risk during the underwriting analysis of the application.

 

Missing or inconsistent data in the non-standardized Underwriter’s Narrative often lacked pertinent facts about the proposed project. The Underwriting Narratives were submitted in various formats by Lenders, which increased the occurrence of inconsistencies, as well as missing, or duplicate information. These inconsistencies or oversights made it difficult for HUD to recommend approval of a mortgage insurance application in a timely and efficient manner. 

 

In order to implement these new underwriting changes and requirements, HUD has updated the application submission templates to facilitate faster processing, more robust underwriting and to incorporate risk-based processing.

 

Please click here to view the online Mortgagee Letter in its entirety