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Update September 16th, 2014

Proposed FHA Loan Quality Assessment Methodology (“Defect Taxonomy”) Posted Today

Today, the Federal Housing Administration (FHA) posted its proposed draft Loan Quality Assessment Methodology for feedback. The Loan Quality Assessment Methodology is one part of FHA’s Blueprint for Access strategy announced earlier this year to expand access to mortgage credit for underserved borrowers.

The proposed Methodology is based on three core concepts:

  1. Identifying a loan defect;
  2. Capturing the sources and causes of the defect; and,
  3. Assessing the severity level of the defect.

Additionally, the Methodology is comprised of nine proposed defects, their specific sources and causes, and four defect severity levels.

FHA’s overall Quality Assurance efforts, including the proposed Loan Quality Assessment Methodology, will provide transparency and consistency for lenders, and make it easier for stakeholders to do business with FHA.

All approved mortgagees and other interested stakeholders are invited to review the proposed Loan Quality Assessment Methodology, which is posted on FHA’s SF Drafting Table web page, and provide us with feedbackfrom September 16 through October 15, 2014.