www.hudclips.org 


U. S. DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
WASHINGTON, D. C. 20410-8000

OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
March 29, 1989
Mortgagee Letter 89-13
TO:  ALL APPROVED MORTGAGEES
SUBJECT:  Clarification of Residential
            Mortgage Credit Report Standards
 
     Mortgagee Letter 88-8  provided new standards for residential
mortgage credit reports for one- to four-family mortgage loans.
Since that publication, both credit reporting agencies and mortgage
lenders have requested clarification of the standards.  This letter
addresses questions we have received about the standards.
 
1.   Requirement for Public Records Search
 
     We have discovered that at least one of the "national reposi-
     tories" ACB Services, Inc., does not provide public record
     information.  Therefore, consumer reporting agencies, in
     complying with the requirement to obtain public record
     information from two or more repositories, must be prepared to
     utilize an additional source, i.e., a direct public records
     search by a company employee or the purchase of information from
     a public records search firm that is independent from the
     national repositories.
 
2.   Employment Verification
 
     All of the borrower's current employment and, if obtainable,
     income must be verified.  This includes self-employed
     borrowers.  A telephone call to a self-employed borrower or
     his/her company will, at a minimum, establish that the place of
     business exists and is operational, even though it is not the
     best or most reliable source of income verification.
 
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3.   Delivery of Residential Mortgage Credit Report
 
     Residential mortgage credit reports may be delivered to lenders
     by any means that are acceptable within the provisions of the
     Fair Credit Reporting Act or other similar regulations.  These
     methods include through the U.S. Postal Service, by messenger,
     over a facsimile machine or through other automated means such
     as on-line computer-to-computer transmissions.  When the
     facsimile machine or the on-line computer transmission is used,
     an exact copy of the transmittal must be available to be
     provided to HUD by the consumer reporting agency upon request by
     HUD and at no additional cost.
 
4.   Quality Reports
 
     Preparation of residential mortgage credit reports that meet
     our standards require research and quality control procedures
     that take time for the consumer reporting agency to complete.
     Pre-screening of applicants does not mitigate the requirement
     of quality credit reports that meet our standards.  Credit
     reports that are rushed through to completion without the use of
     appropriate research routines are unacceptable.
 
     Any questions about these revisions to the residential mortgage
credit reports standards should be addressed to your local HUD Field
Office.
 
                                   Sincerely yours,
 
                                   James E. Schoenberger
                                   General Deputy Assistant Secretary
                                     for Housing
 
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