source:
  type: regulation
  id: hud-4000-1-ii-a-5
  authority: "HUD Handbook 4000.1 Part II.A.5 — Manual Underwriting of the Borrower"
  description: "HUD Handbook 4000.1 Part II.A.5 governs FHA manual underwriting —\nwhen AUS issues Refer / when TOTAL Accept was downgraded / when HUD\nemployees are involved. Covers required credit reports (Tri-Merged\nor RMCR), per-Borrower credit pulls, non-borrowing-spouse community-\nproperty treatment, traditional-vs-nontraditional credit\ndevelopment, and the duty to submit downgraded HUD-employee\nMortgages to FHA for final underwriting approval.\n"
obligations:
- id: hud-4000-1-ii-a-5-manually-underwrite-refer-or-downgrade
  canonical_id: hud-4000-1-ii-a-5-manually-underwrite-refer-or-downgrade
  section: "HUD Handbook 4000.1 II.A.5 — Manual underwrite on AUS Refer or downgrade"
  description: '[LENDER] (Mortgagee) must manually underwrite any application where

    the AUS issues a Refer recommendation OR which was downgraded to a

    manual underwrite (under any II.A.4 trigger). The manual review

    must apply FHA''s general credit policy and the specific manual-

    underwriting requirements at II.A.5.

    '
  type: do
  audit_question: For every FHA loan application receiving an AUS Refer or that was downgraded to manual underwriting, can [LENDER] evidence that manual underwriting was performed per HUD 4000.1 II.A.5 (credit policy + manual-specific evaluation), not just the AUS-Accept-style review?
  workflow_phase: loan_origination
  owner_role: underwriting_manager
  secondary_owner_role: compliance_officer
  cadence: per-refer-or-downgrade
  consequence: FHA insurance ineligibility; indemnification exposure on QC review.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - manual-underwriting
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 II.A.5 — Manual Underwriting of the Borrower"
    source_class: hud-handbook-4000-1
    source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
    snapshot_id: 3bf33edadcf6461d
    fetched_at: '2026-05-25T14:10:11Z'
    content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
    paragraph_quote: 'The Mortgagee must manually underwrite those applications where the AUS issues a Refer or applications which were downgraded to a manual underwrite.

      '
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d. II.A.5 manual-

      underwrite-on-Refer-or-downgrade operative clause.

      '
  promoted_at: '2026-05-25T17:53:02+00:00'
  promoted_from: hud-4000-1-ii-a-5-roundd-v1.yaml
  program_review: Do the P&Ps ensure any AUS-Refer or downgraded application is manually underwritten under FHA's general credit policy and the II.A.5 manual-specific requirements?
  file_review: Pull Refer/downgraded files; confirm manual underwriting per II.A.5 (credit policy + manual-specific evaluation) rather than an AUS-Accept-style review.
  judgment: false
- id: hud-4000-1-ii-a-5-hud-employee-fha-final-approval
  canonical_id: hud-4000-1-ii-a-5-hud-employee-fha-final-approval
  section: "HUD Handbook 4000.1 II.A.5 — HUD-employee Mortgage requires FHA final approval"
  description: 'If a Mortgage receiving an AUS Refer or downgrade to manual

    processing involves a HUD employee, [LENDER] (Mortgagee) must

    underwrite the transaction per HUD 4000.1 Manual Underwriting

    guidance AND submit the underwritten mortgage application to FHA

    for final underwriting approval. [LENDER] may not close the

    Mortgage without FHA''s final approval in this scenario.

    '
  type: do
  audit_question: For every FHA loan application where the Borrower is a HUD employee AND received a Refer or downgrade, can [LENDER] produce evidence of submission to FHA for final underwriting approval AND FHA's approval response prior to closing?
  workflow_phase: loan_origination
  owner_role: underwriting_manager
  secondary_owner_role: compliance_officer
  cadence: per-hud-employee-loan
  consequence: FHA insurance void if closed without final FHA approval on HUD-employee Mortgage.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - hud-employee
  - fha-final-approval
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 II.A.5 — HUD-Employee Manual Underwriting"
    source_class: hud-handbook-4000-1
    source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
    snapshot_id: 3bf33edadcf6461d
    fetched_at: '2026-05-25T14:10:11Z'
    content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
    paragraph_quote: 'The Mortgagee must submit the underwritten mortgage application to FHA for final underwriting approval.

      '
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d. II.A.5 HUD-employee

      FHA-final-approval operative clause.

      '
  promoted_at: '2026-05-25T17:53:02+00:00'
  promoted_from: hud-4000-1-ii-a-5-roundd-v1.yaml
  program_review: Does the program account for the HUD-employee condition — on a Refer/downgrade involving a HUD employee, requiring submission to FHA for final underwriting approval and prohibiting closing without it?
  file_review: Spot-check HUD-employee Refer/downgrade files; confirm submission to FHA and FHA's approval response prior to closing.
  judgment: false
- id: hud-4000-1-ii-a-5-credit-report-trmcr-or-rmcr
  canonical_id: hud-4000-1-ii-a-5-credit-report-trmcr-or-rmcr
  section: "HUD Handbook 4000.1 II.A.5.a.i — Required credit report type (Manual)"
  description: '[LENDER] (Mortgagee) must obtain EITHER a Tri-Merged Credit Report

    (TRMCR) OR a Residential Mortgage Credit Report (RMCR) from an

    independent consumer reporting agency for manual underwriting.

    [LENDER] must use the same credit report and credit scores that

    were sent to TOTAL when scoring the application.

    '
  type: do
  audit_question: For every manually underwritten FHA loan, can [LENDER] evidence (a) a TRMCR or RMCR from an independent CRA, and (b) that the same report + scores used for TOTAL were used in the manual underwriting?
  workflow_phase: loan_origination
  owner_role: loan_processor
  secondary_owner_role: underwriting_manager
  cadence: per-manual-underwriting-application
  consequence: Incomplete documentation; FHA QC defect; potential indemnification.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - credit-report
  - trmcr
  - rmcr
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 II.A.5.a.i — General Credit Requirements (Manual)"
    source_class: hud-handbook-4000-1
    source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
    snapshot_id: 3bf33edadcf6461d
    fetched_at: '2026-05-25T14:10:11Z'
    content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
    paragraph_quote: 'The Mortgagee must either obtain a Tri-Merged Credit Report (TRMCR) or a Residential Mortgage Credit Report (RMCR) from an independent consumer reporting agency.

      '
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d. II.A.5.a.i credit-

      report-type operative requirement. The "must use the same credit

      report sent to TOTAL" follow-on sentence paraphrased in description.

      '
  promoted_at: '2026-05-25T17:53:02+00:00'
  promoted_from: hud-4000-1-ii-a-5-roundd-v1.yaml
  program_review: Do the P&Ps ensure manual underwriting uses a TRMCR or RMCR from an independent CRA, and the same report + scores that were sent to TOTAL?
  file_review: Pull manually underwritten files; confirm a TRMCR/RMCR from an independent CRA and that the same report and scores used for TOTAL were used.
  judgment: false
- id: hud-4000-1-ii-a-5-traditional-credit-first
  canonical_id: hud-4000-1-ii-a-5-traditional-credit-first
  section: "HUD Handbook 4000.1 II.A.5.a.ii — Traditional credit before non-traditional"
  description: 'If a traditional credit report is available, [LENDER] (Mortgagee)

    must use a traditional credit report. Only when a traditional

    credit report is NOT available may [LENDER] develop the Borrower''s

    credit using non-traditional credit history methodology per

    II.A.5.a.iii.

    '
  type: do
  audit_question: For every manually underwritten FHA loan where non-traditional credit history was developed, can [LENDER] evidence that a traditional credit report was not available before resorting to non-traditional methods?
  workflow_phase: loan_origination
  owner_role: underwriting_manager
  secondary_owner_role: compliance_officer
  cadence: per-non-traditional-credit-case
  consequence: FHA QC review will flag inappropriate non-traditional credit reliance.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - traditional-credit
  - non-traditional-credit
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 II.A.5.a.ii — Types of Credit History (Manual)"
    source_class: hud-handbook-4000-1
    source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
    snapshot_id: 3bf33edadcf6461d
    fetched_at: '2026-05-25T14:10:11Z'
    content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
    paragraph_quote: 'If a traditional credit report is available, the Mortgagee must use a traditional credit report.

      '
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d. II.A.5.a.ii

      traditional-credit-first operative clause.

      '
  promoted_at: '2026-05-25T17:53:03+00:00'
  promoted_from: hud-4000-1-ii-a-5-roundd-v1.yaml
  program_review: Do the P&Ps ensure a traditional credit report is used when available, with non-traditional credit history developed only when traditional is unavailable?
  file_review: Pull files where non-traditional credit was developed; confirm a traditional report was not available before non-traditional methods were used.
  judgment: false
- id: hud-4000-1-ii-a-5-streamline-refi-no-credit-report
  canonical_id: hud-4000-1-ii-a-5-streamline-refi-no-credit-report
  section: "HUD Handbook 4000.1 II.A.5.a.i — Streamline refinance credit-report exception"
  description: '[LENDER] (Mortgagee) is NOT required to obtain a credit report for

    non-credit-qualifying Streamline Refinance transactions. This is a

    narrow exception to the otherwise-mandatory per-Borrower credit

    report requirement at II.A.4.b.i and II.A.5.a.i.

    '
  type: do
  audit_question: For non-credit-qualifying Streamline Refinance transactions where no credit report was obtained, can [LENDER] document that the loan met the non-credit-qualifying Streamline classification per HUD 4000.1?
  workflow_phase: loan_origination
  owner_role: underwriting_manager
  secondary_owner_role: compliance_officer
  cadence: per-streamline-refi
  consequence: Misclassified Streamline refi without credit report could create indemnification exposure if loan should have been credit-qualifying.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - streamline-refinance
  - credit-report-exception
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 II.A.5.a.i — General Credit Requirements (Manual)"
    source_class: hud-handbook-4000-1
    source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/40001HSGH.pdf
    snapshot_id: 3bf33edadcf6461d
    fetched_at: '2026-05-25T14:10:11Z'
    content_hash: sha256:e1c2dc1c75ddb0ee32fe5c2fb7c9bb19f1c93b48a3e26e6d63dc6e7f37c92ec0
    paragraph_quote: 'The Mortgagee is not required to obtain a credit report for non-credit qualifying Streamline Refinance transactions.

      '
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d. II.A.5.a.i

      Streamline refinance credit-report exception.

      '
  promoted_at: '2026-05-25T17:53:03+00:00'
  promoted_from: hud-4000-1-ii-a-5-roundd-v1.yaml
  program_review: Does the program account for the non-credit-qualifying Streamline Refinance exception — permitting no credit report only where the loan properly meets that classification?
  file_review: Spot-check no-credit-report Streamline files; confirm the loan met the non-credit-qualifying Streamline classification per Handbook 4000.1.
  judgment: false
_promotion_history:
- promoted_at: '2026-05-25T17:53:03+00:00'
  candidate_path: obligations\_remediation\round-d-investor-guides\hud-4000-1-ii-a-5-roundd-v1.yaml
  candidates_promoted: 5
  candidates_skipped_existing: 0
