HUD HOC Reference Guide

HUD's Post Endorsement Technical Review list of findings codes has been updated and are effective as of September 28, 2012.

These findings codes correlate to a particular credit, risk or valuation category. The first two digits of each code will represent the code category, e.g. CH -credit history; EQ - eligibility and qualification. The last two digits will indicate the specific finding within that category.

Effective September 28, 2012, FHA will use the new codes to cite findings on all cases selected for Post Endorsement Technical Review. The list containing all codes may be accessed via the web-link below. For authorized FHAC users, the new rating codes will appear on the Mortgagee Performance Reports (password required) and on the individual case and Underwriter Report (password required) as of September 28, 2012.

• Updated PETR Findings Codes - September 28, 2012
• PETR Reason Codes used prior to October 4, 2010

A rating of CONFORMING means no findings were identified in FHA's review of the credit, capacity, capital and collateral in the file. A rating of DEFICIENT means one or more findings were identified in the review of the file that do not present a risk to the Department or may indicate documentation or processing errors, but such findings and errors did not result in a change to approval and/or insurability. A rating of UNACCEPTABLE means findings were noted indicating the file should not have been approved and/or insured or resulted in a significant increase in mortgage risk through one or more of the following:

• A greater credit risk
• A decrease in property security
• Any acceptance of a mortgagor, or property, not permitted by HUD policy or statute
• Any action by the mortgagee to misrepresent either the financial capability of the applicant mortgagor or the condition of the property offered as security for the mortgage
• Any action that results in the omission or improper disclosure of information on the application that does not allow for a complete picture of the applicant's financial status and/or the intended use of the property
• The mortgagee failed to identify irregularities and to resolve material discrepancies and/or conflicting information contained in documentation used to originate and/or underwrite the loans

An additional rating code of MITIGATED will apply for cases where an initial rating of UNACCEPTABLE was issued and the lender was able to provide documentation in response to a request from HUD that mitigated the risk. In such cases, the UNACCEPTABLE rating will be changed to MITIGATED. If more than one code was cited to support the issuance of an UNACCEPTABLE rating, the rating will only be changed if all risk factors have been mitigated.