source:
  type: regulation
  id: hud-4000-1-ii-a-2
  authority: "HUD Handbook 4000.1 II.A.2 — Allowable Mortgage Parameters"
  description: 'HUD Handbook 4000.1 Part II.A.2 (Allowable Mortgage Parameters) for

    Title II Insured Housing Programs Forward Mortgages. Covers basic

    creditworthiness/capacity/capital determination, maximum mortgage

    amounts under Nationwide Limits, LTV, Minimum Required Investment

    (MRI), and UFMIP/financing requirements.

    '
obligations:
- id: hud-4000-1-ii-a-2-creditworthiness-capacity-capital
  canonical_id: hud-4000-1-ii-a-2-creditworthiness-capacity-capital
  section: "HUD Handbook 4000.1 II.A.2 — Underwriting Standard"
  description: 'When underwriting an FHA-insured Mortgage, [LENDER] must determine

    the Borrower''s creditworthiness, capacity to repay, and available

    capital to support the Mortgage. [LENDER] must also examine the

    Property to ensure it provides sufficient collateral for the

    Mortgage.

    '
  type: do
  audit_question: For every FHA-insured Mortgage [LENDER] underwrites, can [LENDER] evidence its determination of (a) Borrower creditworthiness, (b) Borrower capacity to repay, (c) Borrower available capital, and (d) sufficiency of Property as collateral?
  workflow_phase: underwriting
  owner_role: underwriter
  secondary_owner_role: compliance_officer
  cadence: per-loan
  consequence: Failure to perform the four-prong underwriting determination is a HUD finding and a foundational ATR/QM exposure.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - underwriting
  - capacity-to-repay
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 II.A.2 — Underwriting Standard"
    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: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: "Mortgagee must determine the Borrower’s creditworthiness, capacity to repay, and available"
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d (HUD Handbook 4000.1

      Update 17, II.A.2). Apostrophe is U+2019 (curly).

      '
  promoted_at: '2026-05-25T17:33:50+00:00'
  promoted_from: hud-4000-1-ii-a-2-roundd-v1.yaml
  auditor_minimum_evidence:
    derivation: snapshot_extract
    derivation_source:
      snapshot_id: 3bf33edadcf6461d
      paragraph_quote: "Mortgagee must determine the Borrower’s creditworthiness, capacity to repay, and available"
      page_or_section: "HUD Handbook 4000.1 II.A.2"
      fetched_at: '2026-05-25T14:10:11Z'
    pathway_selection_kind: mutually_exclusive_by_facts
    pathways:
    - pathway_id: csh-amep-hud-ii-a-2-aus-accept
      name: "TOTAL Scorecard ACCEPT/APPROVE — AUS-driven creditworthiness determination"
      evidence_items:
      - evidence_id: csh-ev-hud-ii-a-2-total-accept-feedback
        kind: document
        description: "TOTAL Scorecard Accept/Approve feedback certificate from the AUS for this loan."
        retention_rule_ref: hud-4000-1-iii-a-1
        examiner_question_ref: "HUD Office of Inspector General / Mortgagee Review Board — FHA Title II oversight"
        cite_verified: true
      - evidence_id: csh-ev-hud-ii-a-2-credit-cap-capital-summary
        kind: record
        description: "Underwriter summary documenting credit reputation (FICO + tradelines reviewed), capacity to repay (DTI calculation + Effective Income), and available assets (reserves + funds to close)."
        retention_rule_ref: hud-4000-1-iii-a-1
        examiner_question_ref: "HUD Office of Inspector General / Mortgagee Review Board — FHA Title II oversight"
        cite_verified: true
    - pathway_id: csh-amep-hud-ii-a-2-manual-uw
      name: "Manual underwriting per HUD II.A.5 — three-prong creditworthiness analysis"
      evidence_items:
      - evidence_id: csh-ev-hud-ii-a-2-manual-uw-record
        kind: record
        description: "Manual underwriting decision record per II.A.5 with explicit creditworthiness / capacity / capital analysis, downgrade rationale if AUS REFER'd, and any compensating factors per II.A.5.b."
        retention_rule_ref: hud-4000-1-iii-a-1
        examiner_question_ref: "HUD Office of Inspector General / Mortgagee Review Board — FHA Title II oversight"
        cite_verified: true
      - evidence_id: csh-ev-hud-ii-a-2-manual-uw-residual-income
        kind: record
        description: "Residual income calculation per II.A.5 manual-UW requirements with documented FHA county/family thresholds."
        retention_rule_ref: hud-4000-1-iii-a-1
        examiner_question_ref: "HUD Office of Inspector General / Mortgagee Review Board — FHA Title II oversight"
        cite_verified: true
    pathway_selection_logic: |
      Two pathways selected by underwriting method: A — TOTAL Scorecard returns Accept/Approve and lender relies on AUS-driven determination + supporting documentation; B — TOTAL Refer or AUS not used, lender performs full manual underwriting per II.A.5 with three-prong creditworthiness analysis and residual-income computation.
  program_review: Do the P&Ps ensure underwriting determines Borrower creditworthiness, capacity to repay, and available capital, AND examines the Property for sufficient collateral?
  file_review: Review underwritten files; the compliance person judges whether the four-part determination (creditworthiness, capacity, capital, collateral sufficiency) is adequately supported.
  judgment: true
- id: hud-4000-1-ii-a-2-mri-determination
  canonical_id: hud-4000-1-ii-a-2-mri-determination
  section: "HUD Handbook 4000.1 II.A.2 — Minimum Required Investment"
  description: '[LENDER] must review the credit report to determine the Borrower''s

    Minimum Required Investment (MRI) per FHA program requirements and

    ensure the Borrower contributes the required investment from

    acceptable sources.

    '
  type: do
  audit_question: For every FHA-insured Mortgage, can [LENDER] evidence its review of the credit report and determination/verification of the Borrower's Minimum Required Investment, including the source of MRI funds?
  workflow_phase: underwriting
  owner_role: underwriter
  secondary_owner_role: loan_officer
  cadence: per-loan
  consequence: Insufficient or unverified MRI is a per-se FHA program violation.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - mri
  - underwriting
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 II.A.2 — MRI"
    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: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: "The Mortgagee must review the credit report to determine the Borrower’s Minimum"
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d (HUD Handbook 4000.1

      Update 17, II.A.2). Apostrophe is U+2019 (curly).

      '
  promoted_at: '2026-05-25T17:33:50+00:00'
  promoted_from: hud-4000-1-ii-a-2-roundd-v1.yaml
  program_review: Do the P&Ps ensure the credit report is reviewed to determine the Borrower's Minimum Required Investment and that the MRI is contributed from acceptable sources?
  file_review: Pull files; confirm the MRI determination and that the MRI funds came from acceptable, documented sources.
  judgment: false
- id: hud-4000-1-ii-a-2-lowest-applicable-ltv
  canonical_id: hud-4000-1-ii-a-2-lowest-applicable-ltv
  section: "HUD Handbook 4000.1 II.A.2 — Maximum LTV"
  description: '[LENDER] must apply the lowest applicable LTV percentage as

    determined under the FHA program for the specific transaction when

    calculating the maximum FHA-insured Mortgage amount.

    '
  type: do
  audit_question: For every FHA-insured Mortgage, can [LENDER] evidence (in its underwriting calculations) that the lowest applicable LTV percentage was used in determining the maximum mortgage amount?
  workflow_phase: underwriting
  owner_role: underwriter
  secondary_owner_role: compliance_officer
  cadence: per-loan
  consequence: Over-leveraging beyond the lowest applicable LTV is a HUD finding and may produce an uninsurable mortgage.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - ltv
  - underwriting
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 II.A.2 — LTV"
    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: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: The Mortgagee must apply the lowest applicable LTV percentage as determined under the
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d (HUD Handbook 4000.1

      Update 17, II.A.2).

      '
  promoted_at: '2026-05-25T17:33:51+00:00'
  promoted_from: hud-4000-1-ii-a-2-roundd-v1.yaml
  program_review: Do the P&Ps ensure the lowest applicable LTV percentage for the specific transaction is used when calculating the maximum mortgage amount?
  file_review: Pull files; confirm the underwriting calculation used the lowest applicable LTV percentage.
  judgment: false
- id: hud-4000-1-ii-a-2-ufmip-handling
  canonical_id: hud-4000-1-ii-a-2-ufmip-handling
  section: "HUD Handbook 4000.1 II.A.2 — UFMIP"
  description: 'The Upfront Mortgage Insurance Premium (UFMIP) on an FHA-insured

    Mortgage must be entirely financed into the Mortgage or paid

    entirely in cash. Partial financing of the UFMIP is not permitted.

    '
  type: do
  audit_question: For every FHA-insured Mortgage, can [LENDER] evidence that the UFMIP was either fully financed into the Mortgage or paid entirely in cash, with no partial financing?
  workflow_phase: closing
  owner_role: closer
  secondary_owner_role: underwriter
  cadence: per-loan
  consequence: Partial UFMIP financing renders the Mortgage uninsurable by FHA.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - ufmip
  - closing
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 II.A.2 — UFMIP"
    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: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: The UFMIP must be entirely financed into the Mortgage or paid entirely in cash. Any
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d (HUD Handbook 4000.1

      Update 17, II.A.2).

      '
  promoted_at: '2026-05-25T17:33:51+00:00'
  promoted_from: hud-4000-1-ii-a-2-roundd-v1.yaml
  program_review: Do the P&Ps ensure UFMIP is either entirely financed into the Mortgage or paid entirely in cash, with no partial financing?
  file_review: Pull files; confirm UFMIP was fully financed or fully paid in cash.
  judgment: false
- id: hud-4000-1-ii-a-2-mortgage-amount-rounding
  canonical_id: hud-4000-1-ii-a-2-mortgage-amount-rounding
  section: "HUD Handbook 4000.1 II.A.2 — Mortgage Amount Rounding"
  description: '[LENDER] must round the FHA-insured mortgage amount down to the

    nearest whole dollar amount in computing the principal balance for

    Title II forward mortgages.

    '
  type: do
  audit_question: For every FHA-insured Mortgage, can [LENDER] evidence that the principal mortgage amount was rounded down to the nearest whole dollar?
  workflow_phase: closing
  owner_role: closer
  secondary_owner_role: underwriter
  cadence: per-loan
  consequence: Incorrect rounding produces a non-conforming mortgage amount and may be cited on HUD post-endorsement review.
  tags:
  - round-d
  - regulator-direct
  - fha
  - hud-4000-1
  - mortgage-amount
  - closing
  - promoted
  primary_source:
    tier: 1
    authority: "HUD Handbook 4000.1 II.A.2 — Mortgage Amount Rounding"
    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: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: The mortgage amount must be rounded down to the nearest whole dollar amount,
    drafter_attestation: 'Copied verbatim from snapshot 3bf33edadcf6461d (HUD Handbook 4000.1

      Update 17, II.A.2).

      '
  promoted_at: '2026-05-25T17:33:51+00:00'
  promoted_from: hud-4000-1-ii-a-2-roundd-v1.yaml
  program_review: Do the P&Ps ensure the Title II forward mortgage principal is rounded down to the nearest whole dollar?
  file_review: Pull files; confirm the principal mortgage amount was rounded down to the nearest whole dollar.
  judgment: false
_promotion_history:
- promoted_at: '2026-05-25T17:33:51+00:00'
  candidate_path: obligations\_remediation\round-d-investor-guides\hud-4000-1-ii-a-2-roundd-v1.yaml
  candidates_promoted: 5
  candidates_skipped_existing: 0
