This reference contains information to help you process Federal Housing Administration (FHA)
mortgages and Department of Veteran Affairs (VA) mortgages using Loan Prospector.
Information on FHA TOTAL Mortgage Scorecard is presented first, followed by VA Loan
information.
FHA TOTAL
Introduction
The FHA TOTAL Mortgage Scorecard (FHA TOTAL) is a credit assessment engine developed,
housed and maintained by the U.S. Department of Housing and Urban Development (HUD) to
assess the credit worthiness of FHA borrowers and to predict the default probability of FHA loan
applicants.
The credit data used in the assessment and FHA TOTAL results are FHA proprietary information
and are passed through Loan Prospector. Loan Prospector provides access to FHA TOTAL and
then presents the FHA TOTAL results. This section provides general guidance for processing
FHA loan applications using FHA TOTAL through Loan Prospector. “TOTAL” stands for
“Technology Open to Approved Lenders.” FHA TOTAL requires additional data elements, and
merged credit data obtained through Loan Prospector from a credit reporting company (CRC), or
affiliate.
Loan applications receiving an Accept risk class from FHA TOTAL through Loan Prospector
will benefit from reduced documentation and relief from certain representations and warranties
as compared to manually underwritten FHA loans.
Objectives
This reference covers what FHA TOTAL is, data entry requirements, obtaining the
required merged credit report, completing an assessment, and the FHA TOTAL
Mortgage Scorecard Full Feedback Certificate. After reviewing this reference, you
will be able to:
Use Loan Prospector to assess an FHA loan application through FHA TOTAL
Explain the credit and documentation waivers available when using FHA
TOTAL
Define the Accept and Refer risk classes for FHA loan applications
Document an FHA loan application for an Accept or a Refer risk class
Vertical revision bars " | " are used in the margin to highlight new requirements and significant
changes.
After loan data is entered or imported into Loan Prospector and the appropriate services are
requested, the following occurs:
1. Loan Prospector assesses eligibility for FHA TOTAL and prepares the data by
performing calculations.
2. Loan Prospector obtains a merged credit report from a credit reporting company or
affiliate (merged credit reference numbers may be used).
3. Loan Prospector sends required loan data and merged credit data received from the
credit reporting company or affiliate to FHA TOTAL.
4. FHA TOTAL performs eligibility checks and the credit risk assessment.
5. FHA TOTAL sends the results back to Loan Prospector.
6. Loan Prospector assembles the results and prepares the applicable credit policy and
documentation feedback messages. Loan Prospector also performs the maximum
mortgage limit validation.
7. Loan Prospector presents all the results in the FHA TOTAL Full Feedback Certificate.
Once results are received, the following can be completed:
Lender Requirements
Before using Loan Prospector with FHA TOTAL to assess FHA loans, you must be an FHA-
approved broker or lender. Only FHA-approved Direct Endorsement lenders can deliver
mortgages to FHA for endorsement.
In addition to having certain agreements and approvals in place with FHA, as defined by HUD,
the following requirements need to be completed prior to accessing FHA TOTAL through Loan
Prospector:
Refer to your local HUD Home Ownership Center field office or the HUD Handbook 4155 for
detailed information.
How to Access FHA TOTAL Mortgage Scorecard and Enter FHA Loan Data
To access FHA TOTAL, login to Loan Prospector. In addition to your User Name and Password
used to access Loan Prospector, you’ll need your certified FHA Lender ID, and FHA Sponsor ID
as applicable.
The following information provides the navigational steps for entering FHA loan data in Loan
Prospector:
1. Login and enter loan data on the Loan File Setup and Loan Application Data pages.
2. Select ‘FHA’ for the Mortgage Type field. Enter all the remaining required loan data
and click Next to access the FHA page.
If you have questions regarding the field, click the field label to access online help.
The Request Services page displays with expanded Merged Credit data fields.
5. Select a CRC and indicate “single” or “joint” merged credit report preference. Enter
a Reference Number if applicable. Click Submit.
For loan applications assessed through FHA TOTAL, a merged credit report is required. An
“Invalid” message will be returned if merged credit is not requested. Merged credit report fees will
be assessed by the CRC, or affiliate.
When no data entry errors are detected, the Confirm Submission page displays.
6. Click Confirm Submit to submit the mortgage for an FHA TOTAL assessment. If
data errors are detected, the Correct Errors page displays. When prompted, follow
the on-line instructions to correct errors.
A message displays confirming loan submission.
Once the loan is selected, a list of available results documents will display in the left navigation
bar under the View Results section. Based on the assessment performed by FHA TOTAL, Loan
Prospector returns the following results:
Upon a successful submission, the FHA TOTAL Scorecard Full Feedback Certificate displays as
follows:
If you need to view your merged credit reports after 7 days, you must resubmit the loan data to
refresh the existing merged credit report. Upon resubmission, merged credit will be re-pulled
from the CRC if critical borrower data changes, a new CRC is selected, joint or single merged
indicator changes, or credit report exceeds 120 days. In these instances, new fees will apply.
Reviewing Results
Each time you successfully submit a loan application to FHA TOTAL through Loan Prospector,
you will receive results providing important data, processing and documentation information for
the transaction. The results, including merged credit, are valid for 120 days prior to the Note
Date. If the results are not dated within 120 days of the Note date, then the loan application must
be resubmitted.
The following apply to FHA loan applications:
The Full Feedback Certificate is titled "FHA TOTAL Scorecard Full Feedback
Certificate".
Selected credit scores are displayed within messages in the Loan Processing
Information section.
Refer risk classes may have messages displayed in the Credit Risk Comments section
indicating reasons why FHA assessed the mortgage as a Refer.
The Doc. Checklist is titled "FHA TOTAL Scorecard Doc. Checklist".
Note: New Submissions With FHA Case Numbers Dated on or After October 1, 2008
In order to effectively determine the required FHA insurance premiums for FHA submissions in
Loan Prospector with FHA Case Numbers dated on or after October 1, 2008, through September
30, 2009, please refer to the September 4 Mortgagee Letter 2008-22 and follow these guidelines:
• As of October 1, if you receive one of the following feedback messages on the FHA
TOTAL Mortgage Scorecard Full Feedback Certificate, and your Case Number issuance
date is on or after October 1, please disregard the message and refer to the September 4
Mortgagee Letter 2008-22 to manually determine the appropriate insurance premiums:
• The following feedback messages should be reviewed for accuracy when received on the
FHA TOTAL Mortgage Scorecard Full Feedback Certificate:
Description Example
Description Example
Description Example
Maximum Mortgage Limit - Loan Prospector electronically transfers information from the
FHA Maximum Mortgage Limit tables found on the HUD website at
http://www.hudclips.org/. Using this automatic service, you can determine if your loan
application meets FHA’s eligibility requirements for the geographic area limits.
− If the loan amount submitted is higher than the maximum mortgage limit, you will
receive a purchase restriction message on the Feedback Certificate so that you may
determine if the loan application is eligible for FHA insurance.
− FHA assessments compare the Property County and Property State submitted to the FHA
Maximum Mortgage Limit Tables. If the Maximum Mortgage Limit cannot be found for
the geographical area submitted, a message appears advising you to manually validate
that the amount is eligible for the specified geographic area.
Check the spelling of the county name against the spelling in the FHA Maximum Mortgage
Limit Tables if you receive the message stating the amount could not be found.
Purchase Restrictions
Purchase Restriction message(s) returned on the FHA TOTAL Scorecard Full Feedback
Certificate provides the reason(s) a mortgage may not be acceptable for FHA insurance.
For example, you will receive specific messages if any of the following occur:
A loan application does not meet FHA’s Statutory Investment requirement of 3.5 percent
A loan application exceeds FHA’s Maximum Mortgage Limit
The Maximum Mortgage Limit cannot be found for a particular geographic region
If the Purchase Restriction message “FB Review FHA Statutory Investment Requirement for
eligibility” is received and you determine sufficient funds exist per HUD Handbook 4155, you
may disregard the message.
Description Example
CAIVRS reminder
The FHA TOTAL Scorecard Full Feedback Certificate provides guidance regarding the
documentation and underwriting requirements for FHA loan applications. You may also want to
refer to the FHA TOTAL Mortgage Scorecard and VA Documentation Matrix located at
http://www.FreddieMac.com/learn/pdfs/uw/total_matrix.pdf. In some cases, one of HUD’s
Home Ownership Centers may need to be contacted for specific credit policy-related questions
and situations not addressed in the results.
FHA TOTAL will return a documentation level indicating the minimum level of documentation
the Seller must obtain for the FHA TOTAL mortgage. Descriptions for the FHA TOTAL
documentation levels are also provided in the following table.
Risk Class
If FHA TOTAL returns a risk class of Accept, the borrower’s credit reputation
Accept and capacity are acceptable to FHA, and FHA agrees to endorse the mortgage,
provided the data is true, complete, and accurate and the entire mortgage
package meets FHA requirements.
The Accept risk class substitutes for an FHA Direct Endorsement underwriter’s
personal review of the borrower’s credit and capacity.
If FHA TOTAL returns a Refer risk class, it has identified weaknesses in the
Refer borrower’s credit reputation and/or capacity that require further assessment.
For FHA mortgages, an FHA Direct Endorsement underwriter must analyze
the entire application to determine if the mortgage qualifies for FHA
endorsement in accordance with the HUD Handbook 4155.
Documentation Level
If FHA TOTAL returns a documentation level of Accept, it allows you to take
Accept advantage of substantially fewer documentation requirements than traditionally
underwritten FHA loan applications.
If FHA TOTAL returns a documentation level of Refer, standard
Refer documentation requirements are available for loan applications assessed by
FHA TOTAL.
Credit
For FHA loan applications receiving an Accept risk class, the lender is not responsible for
representations or warranties related to determining borrower credit reputation. The Accept
credit warranty message states:
LOAN PROCESSING INFORMATION
----------APPLICABLE CREDIT WARRANTIES AND WAIVERS---------
F0 Credit Warranty: Not required to determine borrower shows the
willingness to pay.
For FHA loan applications receiving a Refer risk class, the lender is responsible for
representations or warranties related to determining borrower credit reputation. The Refer credit
warranty message states:
LOAN PROCESSING INFORMATION
-----------APPLICABLE CREDIT WARRANTIES AND WAIVERS--------
F6 Credit Warranty: Required to determine that the borrower shows the
willingness and financial ability to pay.
Ratios
For FHA loan applications receiving an Accept risk class, the lender is not responsible for
determining whether the borrower’s monthly housing payment-to-income ratio and monthly
debt-to-income ratio are acceptable to FHA. The Accept ratio warranty message:
LOAN PROCESSING INFORMATION
---------APPLICABLE CREDIT WARRANTIES AND WAIVERS----------
FY Ratio Warranty: Not required to determine if the borrower's monthly
housing and monthly debt ratios meet program requirements.
For FHA loan applications receiving a Refer risk class, the lender is responsible for determining
whether the borrower’s monthly housing payment-to-income ratio and monthly debt-to-income
ratio are acceptable to FHA. The Refer ratio warranty message in our AUS states:
LOAN PROCESSING INFORMATION
----------APPLICABLE CREDIT WARRANTIES AND WAIVERS-----
FZ Ratio warranty: Required to document reasons, including compensating
factors, for approving the loans that exceed FHA-established debt ratios.
CAIVRS
FHA loan applications are subject to Credit Alert Interactive Voice Response System (CAIVRS)
authorization showing no delinquent obligation or claim payment for all borrowers.
The following messages may be returned on the FHA TOTAL Full Feedback Certificate:
CREDIT INFORMATION
-----------APPLICABLE CREDIT WARRANTIES AND WAIVERS--------
HA: If CAIVRS indicates delin/lien, manually downgrade to REFER.
You or the FHA Direct Endorsement underwriter, as applicable, must determine all borrowers
have a clear CAIVRS number. If an applicant has a credit alert status problem, the applicant
must contact the agency reporting the issue and resolve it in order to be eligible for FHA
endorsement. You may also be required to reclassify the loan application to a Refer risk class.
The lender retains all authority to make the lending decision. Any issues or questions regarding
granting or denying credit, including the use of adverse actions notices, should be directed to the
lender.
If… Then…
The merged credit data Enter the correct information into Loan Prospector and
obtained through Loan request the assessment again.
Prospector contains incorrect
borrower identifying
information for any of the
following:
Name
Social Security Number
The loan application receives If the inaccurate information has been corrected at the
an FHA Accept risk class, repositories, you may use Loan Prospector’s optional
but the merged credit data Reorder Credit Service to request fresh merged credit for
contains incorrect identifying individual borrowers or joint borrower pairs. Refer to the
or significantly inaccurate LoanProspector.com online help or Merged Credit Report
information. Options quick reference at
http://www.FreddieMac.com/learn/pdfs/uw/using_mc.pdf
for information on using this service.
If incorrect identifying or significantly inaccurate
information still exists, manually reclassify the loan
application to Refer,
Document all borrowers' credit reputations according to the
HUD Handbook 4155 for FHA loan applications, and
Order a triple-merged credit report or RMCR or
independent third-party information to clarify the
inaccuracy.
The merged credit data does Obtain a separate written verification for each significant debt
not contain a reference for reported on the loan application but not verified on the merged
each significant open debt credit data.
listed on the loan application.
The merged credit data has Obtain a separate written verification for each applicable
accounts listed as "will rate account.
by mail only" or "need
written authorization".
The loan application receives • The FHA Direct Endorsement underwriter must base the
a Refer risk class. assessment of the borrower’s credit reputation on the
borrower’s entire credit history for all borrowers as outlined
in the HUD Handbook 4155.
• Include any debts resulting from credit inquiries in the past
90 days in the total monthly debt reported to Loan
Prospector.
If… Then…
The FHA Direct Document the loan application according to the reduced
Endorsement underwriter documentation requirements for a Refer risk class.
concludes that the borrower’s
credit reputation is
acceptable despite significant
adverse or derogatory
information.
The merged credit data Accept Risk Class:
shows that a mortgage or Reclassify the risk class to Refer.
significant debt is greater Any credit or ratio waivers listed on the FHA TOTAL Full
than 90 days past due and the Feedback Certificate are invalid.
credit report is up-to-date. Document according to Refer documentation guidelines.
Refer Risk Class:
Underwrite and document the loan application to the Refer risk
class and documentation requirements.
The merged credit data All Loan applications:
contains derogatory No explanation of derogatory credit is required for loan
information. applications receiving an Accept risk class.
All other loan applications require a written explanation
from the borrower.
Note: judgments must be paid off per HUD Handbook
4155.
The final risk class and documentation level is greater than 120 days from the Note Date.
The merged credit data results are greater than 120 days from the Note Date.
The Credit Alert Interactive Voice Response System (CAIVRS) authorization shows a
Federal Delinquency/Lien for any borrower.
Any information changes - including decreases to a borrower’s income, assets and/or
liabilities.
There is a change to the property valuation, sales price or terms and conditions of the
mortgage.
There is a critical borrower(s) data change or addition/deletion of borrower(s)
To include the FHA Case Number if not already entered on a prior submission.
Perform the following steps if you need to resubmit an FHA loan application:
The Credit Reporting Company and Single or Joint report type fields must be
completed on every resubmission regardless of access method. If the information is
not entered, the loan application will receive an Incomplete response and messages
instructing you to enter the required information. The process for entering data in the
fields may vary based on access type when you resubmit an FHA loan application:
Note: Merged credit will automatically be re-pulled from the CRC if critical
borrower data changes, a new CRC is selected, joint or single merged indicator
changes, or credit report exceeds 120 days. Fees will apply. Refer to the
LoanProspector.com online help or Merged Credit Report Options quick reference at
http://www.FreddieMac.com/learn/pdfs/uw/using_mc.pdf for more information on
using the merged credit options.
4 Submit the mortgage for assessment.
5 Review the assessment results. Look for any changes to the risk class and
documentation level, as well as the detailed feedback messages for any changes that
would impact the processing and underwriting of the mortgage.
Place the FHA TOTAL Scorecard Full Feedback Certificate on the right side, top sheet,
of the FHA endorsement binder
If Accept risk class, enter "FHA TOTAL Scorecard" on line 19 of the 92900, in lieu of a
DE underwriter's signature
Example 92900-A:
X This mortgage was rated as an “accept” by a FHA-approved automated underwriting system. As such, the undersigned representative of the
mortgagee certifies to the integrity of the data supplied by the lender used to determine the quality of the loan, that a Direct Endorsement
Underwriter reviewed the appraisal (if applicable) and further certifies that this mortgage is eligible for HUD mortgage insurance under the
Direct Endorsement program. I hereby make all certifications required for this mortgage as set forth in HUD Handbook 4000.4
Additional Resources
Questions related to the FHA TOTAL assessment through Loan Prospector, including
functionality and feedback messages may be directed to Freddie Mac Customer Service:
Questions regarding FHA credit policy and underwriting requirements should be directed to:
Sponsoring lender
FHA Direct Endorsement Underwriter
FHA’s frequently asked questions at http://faq.fha.gov/
FHA’s Resource Center at 800-CALLFHA (225-5342)
HUD Handbook 4155, FHA’s Technology Open To Approved Lenders (TOTAL)
Mortgage Scorecard User Guide, Mortgagee Letter 2004-01, dated January 6, 2004,
and Mortgagee Letter 2008-16, dated June 11, 2008, all located at
http://www.hudclips.org
HUD website located at http://www.hud.gov
Summary
Following are the key points for FHA loan applications assessed by FHA TOTAL through Loan
Prospector:
For FHA loan applications that receive a Refer risk class, the lender is
responsible for the credit and ratio warranties.
This document is not a replacement or substitute for the requirements set forth in the Single-
Family Seller/Servicer Guide (Guide), Loan Prospector Functionality Guide, and/or terms of
your Master Agreement and/or Master Commitment, HUD Handbook 4155, FHA’s TOTAL
Mortgage Scorecard User Guide or VA Lender's Handbook.
VA Loans
Introduction
The Department of Veterans Affairs (VA) Freddie Mac allows Loan Prospector automated
underwriting service to assess VA loan applications. The Department of Veterans Affairs then
guarantees the VA mortgages.
Objectives
Some requirements for processing VA loan applications differ from those of
conventional/conforming loan applications. After completing this section, you
will be able to:
Use Loan Prospector to assess VA loan applications
Explain the credit and documentation waivers available when using Loan
Prospector to assess VA loan applications
Define the Accept and Refer risk classes for VA loan applications
Document a VA loan application using Accept and Refer documentation
requirements
Note: Vertical revision bars " | " are used in the margin to highlight new requirements and
significant changes.
Lender Requirements
Before processing VA loan applications through Loan Prospector, you must have certain
agreements and approvals in place. You must be an approved lender to use Loan Prospector for
VA loan applications and be an approved VA Automatic lender.
Standard VA Processes
Assessing VA loans with Loan Prospector allows you to process more VA loan applications in
less time with less work than manual underwriting. However, the following VA standard
processes remain the same when assessing VA loan applications with Loan Prospector:
4. Click Submit.
When no data entry errors are detected, the Confirm Submission page displays.
5. Click Confirm Submit to submit the mortgage for a VA assessment. If data errors are
detected, the Correct Errors page displays. When prompted, follow the on-line instructions
to correct errors.
A message displays confirming loan submission.
Accessing VA Results
After submitting the mortgage for assessment, if you decide to wait for the results, they will
display automatically, otherwise you may access results later using the Unviewed Results option
on the left navigation bar for up to 14 days. If you have not viewed the results within 14 days,
use the Find Loans feature on the Loan Prospector Main page to access the loan and view
results.
Once the loan is selected, a list of available results documents will display in the left navigation
bar under the View Results section. Based on the assessment performed, Loan Prospector
returns the following results:
Once merged credit data has been accessed it is no longer accessible from the navigation bar
after 7 days unless the mortgage is resubmitted. If you need to view your merged credit reports
after 7 days, use the merged credit reference number and resubmit the loan to refresh the existing
merged credit report.
A small fee will be incurred.
Reviewing Results
Each time you successfully submit a loan to Loan Prospector, you will receive results providing
important data, processing and documentation information for the transaction. Also, just like
conventional and FHA loans, the results, including merged credit, are valid for 120 days prior to
the Note Date. If the results are not dated within 120 days of the Note date, then the loan data
must be resubmitted.
The information provided on the Full Feedback Certificate and Doc Checklist for VA loans is in
the same format as the results for conventional loans.
Purchase Restrictions
Purchase Restriction message(s) returned on the Full Feedback Certificate provides the reason(s)
a loan may not be acceptable for VA guaranty.
For example, you will receive specific messages if a loan application does not meet:
VA’s requirements for the loan program
VA’s requirements for loan-to-value (LTV)
The Full Feedback Certificate provides guidance regarding the documentation and underwriting
requirements for VA mortgages. You may also want to refer to the FHA TOTAL Mortgage
Scorecard and VA Documentation Matrix located at
http://www.FreddieMac.com/learn/pdfs/uw/total_matrix.pdf. In some cases, you may need to
contact VA for specific credit policy-related questions and situations not addressed in the results.
Risk Class
If Loan Prospector returns a risk class of Accept, the borrower’s credit
Accept reputation and capacity are acceptable to VA, and VA agrees to guarantee the
loan, provided the data is true, complete, and accurate and the entire mortgage
package meets VA requirements.
If Loan Prospector returns a Refer risk class, it has identified weaknesses in the
Refer borrower’s credit reputation and/or capacity that require further assessment.
For VA loans, a VA-Automatic Approved lender must analyze the application
to determine if the mortgage qualifies for VA guaranty, according to the VA
Lender’s Handbook.
Documentation Level
If Loan Prospector returns a documentation level of Accept, it allows you to
Accept take advantage of substantially fewer documentation requirements than
traditionally underwritten VA loans.
If Loan Prospector returns a documentation level of Refer, standard
Refer documentation requirements are available for these loans.
VA determines the residual income requirement according to the Property State you submit to
Loan Prospector. In some cases, due to the overall characteristics of the loan data and the
borrower, it is possible to receive an Accept risk class, even though the residual income may
below the figures shown on the chart in the VA Lender’s Handbook. You can verify the
residual income you submitted to Loan Prospector in the Loan Processing Information section
on the Full Feedback Certificate.
Credit
For VA loan applications receiving an Accept risk class, the lender is not responsible for
representations or warranties related to determining borrower credit reputation. The Accept
credit warranty message states:
For VA loan applications receiving a Refer risk class, the lender is responsible for
representations or warranties related to determining borrower credit reputation. You must
determine the borrower’s willingness to repay and that the loan file contains evidence of an
acceptable credit reputation. The Refer credit warranty message states:
Ratios
For VA loan applications receiving an Accept risk class, the lender is not responsible for
determining whether the borrower’s monthly housing payment-to-income ratio and monthly
debt-to-income ratio are acceptable to VA. The Accept ratio warranty message:
For VA loan applications receiving a Refer risk class, the lender is responsible for determining
whether the borrower’s monthly housing payment-to-income ratio and monthly debt-to-income
ratio are acceptable to FHA. The Refer ratio warranty message in our AUS states:
CAIVRS
VA Accept risk class loan applications are subject to Credit Alert Interactive Voice Response
System (CAIVRS) authorization for all borrowers showing no delinquent obligation or claim
payment. CAIVRS is a system used to check applicants for defaults in government-backed loans
(i.e., student loans and FHA or VA loans).
CREDIT INFORMATION
-----------APPLICABLE CREDIT WARRANTIES AND WAIVERS--------
F1 CAIVRS Warranty: CAIVRS authorization for all borrowers must not
indicate a delinquent obligation/claim payment.
You or the VA Automatic Underwriter, as applicable, must determine all borrowers have a clear
CAIVRS number. If an applicant has a credit alert status problem, the applicant must contact the
agency reporting the issue and resolve it in order to be eligible for VA guarantee. You may also
be required to reclassify to a Refer risk class.
The lender retains all authority to make the lending decision. Any issues or questions regarding
granting or denying credit, including the use of adverse actions notices, should be directed to the
lender.
If… Then…
The credit reports you are using Enter the correct information into Loan Prospector and
to make your lending decision request the assessment again.
contain incorrect borrower
identifying information for any
of the following:
Name
Social Security Number
The loan receives an Accept If the inaccurate information has been corrected at the
risk class from Loan Prospector, repositories, you may use Loan Prospector’s optional
but the credit data contains Reorder Credit Service to request fresh credit for
incorrect identifying or individual borrowers or joint borrower pairs. Refer to the
significantly inaccurate LoanProspector.com online help or Loan Prospector
information, Functionality Guide at
http://www.freddiemac.com/learn/pdfs/uw/fun_guide.pdf
for information on using this service.
If incorrect identifying or significantly inaccurate
information still exists, manually reclassify the loan
application to Refer,
Document all borrowers' credit reputations according to the
VA Lender’s Handbook for VA loan applications, and
Order a triple-merged credit report or RMCR or
independent third-party information to clarify the
inaccuracy.
The credit data does not contain Obtain a separate written verification for each significant debt
a reference for each significant reported on the application but not verified on the credit data.
open debt listed on the loan
application
The credit data has accounts Obtain a separate written verification for each applicable
listed as "will rate by mail only" account.
or "need written authorization"
The loan data receives a Refer The VA Automatic underwriter must base the assessment
risk class from Loan Prospector of the borrower’s credit reputation on the borrower’s entire
credit history as outlined in the VA Lender’s Handbook.
Include any debts resulting from credit inquiries in the past
90 days in the total monthly debt you report to Loan
Prospector.
The VA Automatic underwriter Document the loan file according to Loan Prospector reduced
concludes that the borrower’s documentation requirements for Refer risk classes.
credit reputation is acceptable
despite significant adverse or
derogatory information
If… Then…
The credit data shows that Re-verify the debt to determine current status.
an existing mortgage or
significant debt is past due,
and
The credit report has not
been updated in 90 days
The credit data shows that Accept Risk Class:
an existing mortgage or Reclassify the risk class to Refer.
significant debt is greater Any credit or ratio waivers listed on the Full Feedback
than 90 days past due and Certificate are invalid.
Credit report is up-to-date Document according to Refer documentation guidelines.
Refer Risk Class:
Underwrite and document the loan file to the Refer risk
class and documentation requirements.
Credit data contains derogatory All Loan files:
information No explanation of derogatory credit is required for any
loan receiving an Accept risk class.
All other loan applications, regardless of loan type, require
a written explanation from the borrower.
Note: Judgments must be paid off or subject to a timely
repayment plan per the VA Lender’s Handbook.
The final risk class and documentation class is greater than 120 days from the Note Date.
The merged credit data results are greater than 120 days from the Note Date.
The Credit Alert Interactive Voice Response System (CAIVRS) authorization shows a
Federal Delinquency/Lien for any borrower.
Any information changes - including decreases to a borrower’s income, assets and/or
liabilities.
There is a change to the property valuation, sales price or terms and conditions of the
mortgage.
There is a change in borrowers.
At least one of the original veteran borrowers must remain, or the loan application is
considered a new application.
For additional information on modifying and resubmitting loans, refer to the Loan Prospector
Functionality Guide located at http://www.FreddieMac.com/learn/pdfs/uw/fun_guide.pdf.
Summary
Following are the key points for VA loan applications:
For VA loan applications that receive a Refer risk class, the lender is
responsible for the credit and ratio warranties.
This document is not a replacement or substitute for the requirements set forth in the Single-
Family Seller/Servicer Guide (Guide), Loan Prospector Functionality Guide, and/or terms of
your Master Agreement and/or Master Commitment, HUD Handbook 4155, FHA’s TOTAL
Mortgage Scorecard User Guide or VA Lender's Handbook.