HUD’s Mortgagee Letter 19-06, dated April 18, 2019, clarifies documentation requirements that FHA-approved Mortgagees must satisfy when originating a mortgage for a borrower using funds from another person or entity to meet their Minimum Required Investment.

This includes specific documentation requirements for Governmental Entity Down Payment Assistance Programs like AHFA’s Step Up Program. 

The effective date of the guidance is for case numbers assigned on or after April 18, 2019. Because this new guidance increases required documentation (AHFA was not provided any prior notification by HUD to ensure all newly required documentation was in place prior to the effective date), AHFA will not accept any new loan reservations for FHA Step Up Loans with a Step Up DPA 2 ^nd Mortgage with an FHA case number issued on or after April 18, 2019, until further notice. 

It is our intention for this reservation suspension to be brief as we work with HUD to ensure our documentation process is in compliance with their new guidance. 

The FHA reservation portal will remain open. However, when reserving your loan, you will be required to upload a copy of your Case Number Assignment as part of Step 1 to verify the date of the assignment was prior to April 18, 2019.  

We encourage lenders to verify if any borrowers who have been pre-qualified for an FHA loan may qualify for our Step Up Conventional Program.