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FHA Loan Quality Assessment Methodology

June 19, 2015

On June 18, 2015, FHA released its Single Family Loan Quality Assessment Methodology or “Defect Taxonomy.”  The Taxonomy explains how FHA plans to gather information about defects in FHA loans.  The Taxonomy is supposed to help FHA lenders identify underwriting issues and reduce errors that could lead to enforcement actions.  FHA hopes that the Taxonomy will give lenders more confidence in working with qualified FHA borrowers across the credit spectrum.  The nine-nine different codes that FHA currently uses to describe loan defects will be reduced to nine distinct defects. 

The effective date of the Taxonomy has yet to be determined by FHA.

FHA Press Release

Loan Defect Taxonomy