Credit Denials

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Chapter 2
Mortgage Credit Guidelines
Page 2-16

A DE underwriter is the designated party responsible for determining the creditworthiness of the borrower on all manually underwritten and AUS "refer" FHA cases. The lender should input the information in FHA Connection under the Mortgage Credit Reject screen in the Case Processing Menu Option. When an application is rejected, the following notices from the lender are required. The borrower must be provided a copy of the Lender's Notice of Denial, the HUD Non-Endorsement Notice (if the case was FHA-Processed) and, when required, an Equal Credit Opportunity Act Notice. Also, whenever a borrower is rejected for unacceptable credit characteristics on the basis of information contained in a credit report, the borrower must be notified and be given the name, address and, if available, the telephone number of the credit reporting agency. All previously rejected loans that are subsequently approved by another lender will undergo a very detailed underwriting review.

Please see: HUD Handbook 4000.2 Paragraph 3-6B