1. FHA's Total Mortgage Scorecard

Introduction

This topic contains information on how underwriting uses the TOTAL Mortgage Scorecard, including

•	a description of TOTAL and the TOTAL Scorecard

•	a comparison of TOTAL to an Automated Underwriting System (AUS)

•	TOTAL scoring recommendations

•	rescoring and tolerance levels, and

•	information on the TOTAL User Guide.

Change Date

May 10, 2009

4155.1 6.A.1.a Description of TOTAL

The acronym “TOTAL” stands for “Technology Open To Approved Lenders.”

TOTAL Scorecard evaluates the overall creditworthiness of the applicants based on a number of credit variables and, when combined with the functionalities of the AUS, indicates a recommended level of underwriting and documentation to determine a loan's eligibility for insurance by the Federal Housing Administration (FHA).

4155.1 6.A.1.b Comparison of TOTAL to AUS

TOTAL is not an AUS. It is a scorecard that is used within an AUS.

To underwrite a loan electronically, a lender must process the request through an AUS that can communicate with TOTAL. TOTAL operates as a system-to-system connection to an AUS.

Together, TOTAL and the AUS either conclude that the borrowers' credit and capacity for repayment of the mortgage are acceptable or will refer the loan application to a Direct Endorsement (DE) underwriter for further consideration and review.

Regardless of the risk assessment provided by TOTAL, the lender remains accountable for compliance with FHA's eligibility requirements, as well as for any credit, capacity, and documentation requirements not covered in the FHA TOTAL Mortgage Scorecard User Guide.

Example: FHA will not be responsible for checking, through TOTAL, lender compliance with maximum mortgage amounts, computing debt-to-income ratios or other functions typically performed by an AUS. TOTAL provides only an assessment of the borrower's credit and capacity to repay.

4155.1 6.A.1.c TOTAL Scoring Recommendations

TOTAL will return recommendations of either

•	“Accept” or “Approve” (different AUSs use different wording), or

•	“Refer.” Gateway does not underwrite loans with "Refer" recommendations.

The table below describes the TOTAL scoring recommendations.

TOTAL Recommendation	Description
Accept/Approve	This recommendation means that, based on the analysis of the credit and capacity to repay, the loan is eligible for FHA insurance provided that data entered into the AUS is true, complete, properly documented and accurate; and the documentation and other eligibility requirements are met.
Refer	This recommendation means that the lender must conduct a manual underwriting review, according to FHA requirements. The lender's DE underwriter must determine if the borrower is creditworthy in accordance with FHA standard credit policies and requirements.

Note: Per FHA policy, a borrower will not be denied an FHA mortgage solely on the basis of a risk assessment generated by TOTAL.

4155.1 6.A.1.d Rescoring and Tolerance Levels

TOTAL provides a risk assessment based on the specific data entered by lenders, such as terms and conditions of the loan, income and assets. Changes in those variables can result in a different risk assessment, and FHA requires that the loan be rescored using the new information.

However, where the differences are minor, rescoring is unlikely to trigger a different risk assessment. FHA therefore, provides a degree of tolerance before triggering a requirement for rescoring.

The table below describes the tolerance level for rescoring requirements when assessing income and assets.

When assessing …	There is no need to rescore if…
cash reserves	the cash reserves verified are not more than 10 percent less than what the borrower reported on the loan application.
Income	the verified income is not more than 5 percent less than what the borrower reported on the loan application.
tax and insurance escrows	the tax and insurance escrows used at scoring do not result in more than a 2 percentage point increase in the payment and debt-to-income ratios.

4155.1 6.A.1.e TOTAL User Guide

FHA has developed the TOTAL User Guide, which is a compilation of the specific credit policies and documentation requirements lenders must follow when using TOTAL.

The instructions in the Guide pertain only to those mortgage applications that had a TOTAL risk assessment, including those scored mortgages referred to an underwriter for manual underwriting.

Reference: For a copy of the TOTAL User Guide, see http://www.hud.gov/offices/hsg/sfh/lender/total_scorecard.cfm