If a loan underwritten using the TOTAL Scorecard receives an Accept recommendation, and an existing debt or obligation secured by a Mortgage that is not listed on the credit report and was not considered by the Automated Underwriting System (AUS) is revealed during the application process, the Mortgagee (Lender) must obtain a verification of Mortgage directly from the Servicer.
For manually underwritten loans, the Mortgagee must determine the Borrower’s Housing Obligation payment history through:
• the credit report;
• verification of rent received directly from the landlord (for landlords with no Identity of Interest with the Borrower);
• verification of mortgage received directly from the Servicer; or
• a review of canceled checks that cover the most recent 12-month period.
The Mortgagee must verify and document the previous 12 months’ housing history. For Borrowers who indicate they are living rent-free, the Mortgagee must obtain verification from the property owner where they are residing that the Borrower has been living rent-free and the amount of time the Borrower has been living rent free.
A Mortgage that has been modified must utilize the payment history in accordance with the modification agreement for the time period of modification in determining late housing payments.
For additional information see Handbook 4000.1 II.A.4.b.iv(C) and II.A.5.a.iii(C) at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh