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Lender Alerts

Lender Alerts

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Sun West Implementation of Revised Manual Underwriting
Requirements as per ML 14-02

Dear Licensed Partner,

Sun West is implementing the new manual underwriting requirements as released by HUD Mortgagee Letter (ML) 2014-02, starting from loans submitted on or after March 17, 2014. The new FHA requirements apply to the following loan transactions:

1. Loans involving borrowers without a credit score, which were not scored against FHA's TOTAL Scorecard
2. Loans receiving a "Refer" scoring recommendation from TOTAL Scorecard
3. Loans receiving an "Accept" scoring recommendation from TOTAL Scorecard but have been downgraded
    to a "Refer" by the underwriter
4. Loans under the Back to Work Program
5. Credit Qualifying Streamline Refinance

Following are the highlights of the changes for manual underwriting requirements:

 Item Comments Type Requirement
Increased Cash Reserve Requirements
Minimum Reserve Requirements
1-2 unit properties Is equal to at least one (1) total mortgage payment.   
3-4 unit properties
Is equal to at least three (3) total mortgage payments. 
Increased Reserve as one of the Acceptable Compensating Factors for Max DTI 40/50%. Click here to see the list of Acceptable Compensating Factors. 1-2 unit properties  Is equal to at least three (3) months reserve. 
3-4 unit properties  Is equal to at least six (6) months reserve.
Maximum Qualifying Ratios/ Acceptable Compensating Factors
Based on the decision credit score.
FICO 500-579 or Non-traditional/ Insufficient Credit
Maximum DTI 31/43%, Acceptable Compensating Factor does not apply.
FICO > 580  Maximum DTI 37/47% with one (1) Acceptable Compensating Factor. 
FICO > 580  Maximum DTI 40/50% with two (2) Acceptable Compensating Factors.
NOTE: Energy Efficient Homes may have stretch ratios of 33/45. 
 For complete details on Sun West's Revised Manual Underwriting Requirements, click here

The new FHA manual underwriting requirements DO NOT apply to:

• All loans rated "Accept" by TOTAL
• Non-credit qualifying FHA to FHA streamline refinance mortgages
• Refinances of Borrowers in Negative Equity Positions (ADP Codes 821, 822, 831 832)
• Section 255 Home Equity Conversion Mortgages
• Title I loans

If you have any questions, please contact your Account Executive at (855) OK-SUNWEST or (855) 657-8693. 


Sun West Mortgage Company, Inc.
18303 Gridley Road
Cerritos, CA 90703
Phone : (800) 453-7884

Equal Housing OpportunityThis information is provided to licensed wholesale brokers only and may not be copied or distributed to customers or potential customers. All loans are subject to approval. Certain restrictions may apply. Listed pricing is a morning indication only. Program rates, prices, guidelines, fees, costs, terms and conditions are subject to change without notice.