source:
  type: regulation
  id: hud-ml-2023-17
  authority: "HUD Mortgagee Letter 2023-17 — Revisions to Rental Income Policies, Property Eligibility, and Appraisal Protocols for Accessory Dwelling Units"
  description: 'HUD ML 2023-17 establishes guidelines for the consideration of rental

    income from Accessory Dwelling Units (ADUs) in underwriting FHA forward

    mortgages and HECM financial assessments, updates property eligibility for

    one-unit properties with a single ADU, and establishes appraiser protocols

    for ADU market rent.

    '
obligations:
- id: hud-ml-2023-17-effective-date
  canonical_id: hud-ml-2023-17-effective-date
  section: "HUD ML 2023-17 — Effective Date"
  description: 'The provisions of HUD ML 2023-17 are effective immediately for [LENDER]

    underwriting FHA forward mortgages and HECMs.

    '
  type: do
  audit_question: For every FHA forward mortgage or HECM where ADU rental income is used as Effective Income on or after October 16, 2023, can [LENDER] demonstrate that the ML 2023-17 ADU rental-income, property-eligibility, and appraisal-protocol provisions were applied?
  workflow_phase: origination
  owner_role: compliance_officer
  secondary_owner_role: default_servicing_analyst
  cadence: continuous
  consequence: ''
  tags:
  - round-b
  - regulator-direct
  - hud-ml
  - fha
  - origination
  - underwriting
  - adu
  - rental-income
  - effective-date
  - promoted
  primary_source:
    tier: 1
    authority: "HUD ML 2023-17 — Effective Date"
    source_class: hud-ml-pdf
    source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-17hsgml.pdf
    snapshot_id: dbdab2f23c6d4b96
    fetched_at: '2026-05-22T19:57:58Z'
    content_hash: sha256:517f01d0b9de252afb0957c9d27016bf83213ef2f15bb8408db514e49d43dd33
    paragraph_quote: The provisions of this ML are effective immediately.
    drafter_attestation: 'Copied verbatim from snapshot dbdab2f23c6d4b96 (content.txt) at

      2026-05-22T20:00Z. Substring is the Effective Date trigger of

      ML 2023-17.

      '
  promoted_at: '2026-05-22T20:56:18+00:00'
  promoted_from: hud-ml-2023-17-roundb-v1.yaml
  program_review: Does the program account for the applicability trigger — applying the ML 2023-17 ADU rental-income / property-eligibility / appraisal-protocol provisions where ADU rental income is used as Effective Income on or after October 16, 2023?
  file_review: Spot-check files using ADU rental income on/after October 16, 2023; confirm the ML 2023-17 provisions were applied.
  judgment: false
- id: hud-ml-2023-17-adu-rental-income-30-percent-cap
  canonical_id: hud-ml-2023-17-adu-rental-income-30-percent-cap
  section: "HUD ML 2023-17 — ADU Rental Income Cap (II.A.4.c.xii(I)(2)(c)(i))"
  description: 'Where [LENDER] uses Rental Income from a one-unit property with a single

    Accessory Dwelling Unit (ADU) as Effective Income for qualifying a Borrower

    on an FHA-insured forward mortgage, the amount of ADU Rental Income used as

    Effective Income must not exceed 30 percent of the total monthly Effective

    Income used to qualify the Borrower.

    '
  type: dont
  audit_question: For every FHA forward mortgage where ADU Rental Income was used as Effective Income to qualify the Borrower, can [LENDER] evidence that the ADU Rental Income used did not exceed 30 percent of the total monthly Effective Income used to qualify the Borrower?
  workflow_phase: origination
  owner_role: compliance_officer
  secondary_owner_role: default_servicing_analyst
  cadence: per-loan
  consequence: ''
  tags:
  - round-b
  - regulator-direct
  - hud-ml
  - fha
  - origination
  - underwriting
  - adu
  - rental-income
  - promoted
  primary_source:
    tier: 1
    authority: "HUD ML 2023-17 — II.A.4.c.xii(I)(2)(c)(i)"
    source_class: hud-ml-pdf
    source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-17hsgml.pdf
    snapshot_id: dbdab2f23c6d4b96
    fetched_at: '2026-05-22T19:57:58Z'
    content_hash: sha256:517f01d0b9de252afb0957c9d27016bf83213ef2f15bb8408db514e49d43dd33
    paragraph_quote: "The amount of the Rental Income from an ADU used as Effective \nIncome must not exceed 30 percent of the total monthly Effective \nIncome used to qualify the Borrower."
    drafter_attestation: 'Copied verbatim from snapshot dbdab2f23c6d4b96 (content.txt) at

      2026-05-22T20:00Z. Substring is the 30 percent ADU rental-income

      cap incorporated into Handbook 4000.1 II.A.4.c.xii(I)(2)(c)(i)

      by ML 2023-17.

      '
  promoted_at: '2026-05-22T20:56:18+00:00'
  promoted_from: hud-ml-2023-17-roundb-v1.yaml
  program_review: Do the P&Ps ensure ADU Rental Income used as Effective Income does not exceed 30% of the total monthly Effective Income used to qualify the Borrower?
  file_review: Pull ADU-rental-income files; confirm the ADU income used was <= 30% of total monthly Effective Income.
  judgment: false
- id: hud-ml-2023-17-adu-no-commercial-rental
  canonical_id: hud-ml-2023-17-adu-no-commercial-rental
  section: "HUD ML 2023-17 — No Commercial Rental Income in Rental Income Calculations (II.A.4.c.xii(I)(2)(a))"
  description: '[LENDER] must not include any income from commercial space in Rental

    Income calculations for FHA-insured forward mortgages.

    '
  type: dont
  audit_question: For every FHA forward mortgage where Rental Income from the subject Property was used as Effective Income, can [LENDER] demonstrate that no commercial-space income was included in the Rental Income calculation?
  workflow_phase: origination
  owner_role: compliance_officer
  secondary_owner_role: default_servicing_analyst
  cadence: per-loan
  consequence: ''
  tags:
  - round-b
  - regulator-direct
  - hud-ml
  - fha
  - origination
  - underwriting
  - rental-income
  - commercial-space
  - promoted
  primary_source:
    tier: 1
    authority: "HUD ML 2023-17 — II.A.4.c.xii(I)(2)(a)"
    source_class: hud-ml-pdf
    source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/2023-17hsgml.pdf
    snapshot_id: dbdab2f23c6d4b96
    fetched_at: '2026-05-22T19:57:58Z'
    content_hash: sha256:517f01d0b9de252afb0957c9d27016bf83213ef2f15bb8408db514e49d43dd33
    paragraph_quote: "No income from commercial space may be included in Rental Income \ncalculations."
    drafter_attestation: 'Copied verbatim from snapshot dbdab2f23c6d4b96 (content.txt) at

      2026-05-22T20:00Z. Substring is the commercial-space exclusion

      rule incorporated into Handbook 4000.1 II.A.4.c.xii(I)(2)(a)

      by ML 2023-17.

      '
  promoted_at: '2026-05-22T20:56:18+00:00'
  promoted_from: hud-ml-2023-17-roundb-v1.yaml
  program_review: Do the P&Ps ensure no commercial-space income is included in Rental Income calculations for forward mortgages?
  file_review: Pull files using subject-Property Rental Income; confirm no commercial-space income was included.
  judgment: false
_promotion_history:
- promoted_at: '2026-05-22T20:56:18+00:00'
  candidate_path: obligations\_remediation\_round_b_drafts\hud-ml-2023-17-roundb-v1.yaml
  candidates_promoted: 3
  candidates_skipped_existing: 0
