FHA Temporary Guidelines for Employment Verification to End Soon
For the FHA and HUD those temporary measures didn’t just include workplace safety guidelines and customer-facing protective measures, they also included changes to basic functions in the FHA loan process such as appraisals and employment verification.
The FHA official site contains a mortgagee letter that explains the how and why of these modifications.
Those modifications included the following (see below), which mentions the President declaring the national emergency back in March 2020, with the FHA and HUD (among many other federal efforts) directed to take actions to reduce the threat to public health for FHA participating lenders, borrowers, appraisers, and others who must work as part of the FHA loan approval process.
Temporary FHA Loan Appraisal and Employment Re-Verification Guidelines
The Secretary of HUD authorized “flexibilities to the re-verification of employment and Acceptable Appraisal Reporting Forms and Protocols by allowing exceptions for Exterior-Only and Desktop Appraisal inspections in certain transactions.”
Deadlines were set, assuming that the coronavirus might be contained or close to being contained by the end of the original temporary policies. But COVID-19 is no respecter of government timelines, election year politics, or personal opinions. The FHA and HUD have extended the original deadlines for these temporary measures to end three times at the time of this writing.
The third extension also included an extension to the FHA's modified employment verification guidelines, which are intended to, "allow industry partners additional opportunity to utilize flexible guidance related to reverification of employment and appraisal protocol for FHA Single Family programs affected by COVID-19."
Deadline for the Current Extension
The extension of re-verification of employment guidance is effective for cases closed on or before October 31, 2020, the same as the modified exterior-only FHA appraisal guidelines.
FHA borrowers should not expect the modified appraisal and employment verification guidelines to be made permanent--all indications are that these changes are strictly temporary in spite of multiple extensions, and will not be incorporated into the FHA Lender's Handbook, HUD 4000.1.
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