Question:
Has FHA issued any guidance with regard to quality control (QC) requirements for early payment defaults (EPDs) in light of the COVID-19 pandemic and increased EPDs nationwide?
Answer:
Yes, FHA recently issued a temporary waiver of its loan-level QC requirements for EPDs. The waiver suspends a mortgage lender’s requirement to select and perform QC reviews of all EPDs for May, June, and July 2020 QC selections.
FHA explained that it observed a significant increase in EPDs nationwide and believes that they are likely caused by loss of employment and/or income due to the public health emergency, rather than a result of non-compliance with FHA Single Family origination and underwriting requirements. Additionally, FHA noted that the federal CARES Act authorizes forbearance relief regardless of delinquency status, which may also cause EPDs.
