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The Federal Housing Administration (FHA) announced that effective for mortgages with case numbers assigned on or after March 18, 2019, the Technology Open to Approved Lenders (TOTAL) Mortgage Scorecard may flag certain mortgages submitted through the automated underwriting system (AUS) and require the lender to manually underwrite those loans. FHA is concerned with mortgages with higher risk characteristics, such as those having less than 620 credit scores and greater than 43 percent debt to income (DTI) ratios. Currently, 25 percent of FHA's loan portfolio is made up of loans with DTI over 50 percent, the highest since 2000. This is coupled with a decrease of the average borrower credit score 670. FHA states it is concerned of the effect on its ability to manage risk and fulfill its mission of supporting sustainable homeownership and is implementing these changes in order to mitigate that risk.
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