FHA Issues Temporary Waiver of QC Requirements for EPDs

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.