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WASHINGTON – Effective May 1, 2004, lenders will be required to use the new Technology Open to Approved Lenders (TOTAL) scorecard for FHA loans to insure single-family mortgages that use automated underwriting. TOTAL will replace the existing proprietary scorecards of Fannie Mae and Freddie Mac used for FHA insurance eligibility. The TOTAL Mortgage Scorecard User Guide published by HUD in November 2003 includes information on which loan purposes, FHA Insurance products, property types, and plan types can be risk assessed by TOTAL. According to the FHA, TOTAL evaluates the overall creditworthiness of the applicants based on a number of credit variables. When combined with automated underwriting systems, it indicates a recommended level of underwriting and documentation to determine a loan’s eligibility for FHA insurance. The scorecard either concludes that the borrower’s credit and capacity for repayment of the mortgage are acceptable or will refer the loan application to a Direct Endorsement underwriter for further consideration and review. Lenders are responsible for the integrity of the data used to obtain the risk assessment, and for resubmitting the loan when material changes are discovered or occur during loan processing.

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