SS Memo 09-03


Date: March 20, 2009

Credit Guidelines

Part IV

In the past, AHFC has not required FHA and HUD 184 loans meet the credit standards set forth in the Part IV of the Selling Guide, provided the loans conformed to the criteria established by FHA and HUD.  However, recent history indicates these loans become delinquent, and subsequently result in foreclosure, at a rate almost double that of conventional and other government insured/guaranteed loans.

In consideration of the afore-stated, it is imprudent for AHFC to continue purchasing loans when there is evidence that less restrictive credit standards has resulted in sub-par performance.  More importantly, although AHFC is a strong advocate of homeownership, allowing homebuyers, with questionable credit, to obtain a loan knowing there is a high probability of default, does a disservice to the borrower.

Therefore, beginning April 15, 2009, all FHA and HUD 184 loans submitted to AHFC for commitment must be underwritten to AHFC Credit Guidelines.  Part IV of the Selling Guide has been amended to reflect this change and includes the expanded total payment and obligation ratio to 43% for FHA and HUD 184 loans.


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Sellers' Guide Part IV