HUD Handbook 4000.1 Part II.A.4
HUD Handbook 4000.1 Part II.A.4 covers FHA's automated-underwriting regime via the TOTAL Mortgage Scorecard — the AUS rules, downgrade triggers to manual underwriting, rescore obligations, and the foundational credit-report requirements that underpin every TOTAL decision. Fills part of the FHA-origination library gap (HUD 4000.1 Part II) identified in the 2026-05-25 coverage audit.
Verbatim regulatory text
Verbatim provisions from HUD Handbook 4000.1 Part II.A.4 — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.
HUD Handbook 4000.1 II.A.4.a — Risk classifications requiring a downgrade to Manual Underwriting
The Mortgagee must downgrade and manually underwrite any Mortgage that received an Accept recommendation if: • the mortgage file contains information or documentation that cannot be entered into or evaluated by TOTAL Mortgage Scorecard; • additional information, not considered in the AUS recommendation affects the overall insurability of the Mortgage; • the Borrower has $1,000 or more collectively in Disputed Derogatory Credit Accounts; • the date of the Borrower’s bankruptcy discharge as reflected on bankruptcy documents is within two years from the date of case number assignment; • the case number assignment date is within three years of the date of the transfer of title through a Pre-Foreclosure Sale (Short Sale); • the case number assignment date is within three years of the date of the transfer of title through a foreclosure sale; • the case number assignment date is within three years of the date of the transfer of title through a Deed-in-Lieu (DIL) of foreclosure; • the Mortgage Payment history, for any mortgage trade line reported on the credit report used to score the application, requires a downgrade as defined in Housing Obligations/Mortgage Payment History (TOTAL); • the Borrower has Undisclosed Mortgage Debt (TOTAL) that requires a downgrade; or • business income shows a greater than 20 percent decline over the analysis period.
HUD Handbook 4000.1 II.A.4.a.vi — Cease AUS use on downgrade to manual underwriting
the Mortgagee must cease its use of the AUS and comply with all requirements for manual underwriting when underwriting a downgraded Mortgage.
HUD Handbook 4000.1 II.A.4.a.vii — TOTAL Mortgage Scorecard rescore on data change
The Mortgagee must rescore a Mortgage when any data element of the Mortgage change and/or new Borrower information becomes available.
HUD Handbook 4000.1 II.A.4.b.i — Credit report for each Borrower obligated on the Note
The Mortgagee must obtain a credit report for each Borrower who will be obligated on the mortgage Note.
HUD Handbook 4000.1 II.A.4.b.i — Non-borrowing spouse credit report in community property states
The Mortgagee must also obtain a credit report for a non-borrowing spouse if the Borrower resides in a community property state, or if the subject Property is located in a community property state, except when excluded by state law.
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Source of record: https://claudeforcompliance.com/regs/hud-4000-1-ii-a-4/
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