Total Mortgage Scorecard

No, the TOTAL Mortgage Scorecard is designed specifically to evaluate the creditworthiness and repayment capacity of the borrower, not the value or condition of the property. The underwriter remains fully responsible for underwriting the appraisal report to ensure the property meets all FHA Property Acceptability Criteria, including Minimum Property Requirements (MPR) and Minimum Property Standards (MPS). While the scorecard streamlines the borrower’s credit assessment, the collateral must be independently reviewed to confirm it provides sufficient security for the mortgage insurance. Any conditions regarding repairs or inspections must be addressed separately from the scorecard’s risk assessment.

A “Refer” recommendation indicates that the TOTAL Mortgage Scorecard could not render an acceptable risk classification based on the data provided. This result requires the Mortgagee to downgrade the application to a manual underwrite. It implies that the automated system identified layers of risk that require human judgment to assess. In these cases, a Direct Endorsement underwriter must perform a comprehensive review of the borrower’s credit, income, and assets according to strict manual underwriting guidelines. The underwriter must determine if the borrower demonstrates the willingness and capacity to repay the mortgage despite the system’s inability to approve the risk.

While most FHA Single Family mortgage transactions must be scored through TOTAL, there are specific exceptions. Streamline Refinance transactions without credit qualifying are not scored because they do not require a full credit assessment. Additionally, mortgages involving assumptions, which involve transferring an existing loan to a new borrower, are excluded. Loans made to nonprofit organizations or governmental entities are also exempt from this scoring requirement. Finally, mortgages for borrowers who do not have Social Security Numbers but are otherwise eligible under FHA residency requirements are manually underwritten and not processed through the TOTAL Mortgage Scorecard.

The TOTAL Mortgage Scorecard review includes an analysis of disputed accounts. If the credit report indicates that the borrower has $1,000 or more collectively in disputed derogatory credit accounts—such as collections or charge-offs—the application must be downgraded to a manual underwrite. However, there are exceptions to this rule. Disputed medical accounts and disputed credit accounts resulting from identity theft, credit card theft, or unauthorized use are excluded from this cumulative balance calculation, provided the lender obtains a police report or other documentation from the creditor to support the nature of the dispute and status of the account.

Mortgagees are generally required to rescore a mortgage through TOTAL whenever new information becomes available or data elements change. However, FHA provides specific tolerance levels where a rescore is not mandatory. For example, a rescore is not required if the verified cash reserves are not less than 10 percent below the previously scored amount. Similarly, if verified income is not less than 5 percent below the previously scored amount, a rescore is unnecessary. Furthermore, minor increases in tax and insurance escrows do not require rescoring unless the change increases the total payment-to-income ratio by more than 2 percent.

Even if the TOTAL Mortgage Scorecard returns an “Accept” result, specific risk factors mandate a downgrade to manual underwriting. The Mortgagee must manually underwrite the loan if the borrower has $1,000 or more in disputed derogatory credit accounts, or if a bankruptcy discharge occurred within two years of the case number assignment. Additionally, a downgrade is required if there has been a foreclosure, short sale, or deed-in-lieu of foreclosure within three years, or if the borrower has undisclosed mortgage debt. Recent mortgage payment delinquencies or a decline in business income greater than 20 percent also trigger this requirement.

An “Accept/Ineligible” finding means that the borrower’s credit profile and capacity to repay are acceptable to FHA standards, but the specific loan structure violates a program requirement. This result is not an automatic denial. Instead, it serves as a flag for the lender to investigate the specific eligibility criteria that failed, such as loan-to-value limits or maximum loan amounts. The Mortgagee must analyze the feedback to determine if the ineligibility can be corrected. If the issue is resolved, the loan may be rescored. If it cannot be corrected in the system but is permissible under FHA policy, the lender may approve it with documentation.

An “Accept/Eligible” recommendation indicates that the TOTAL Mortgage Scorecard has evaluated the borrower as an acceptable credit risk and that the entered loan data appears to meet FHA program eligibility standards. For loans with this classification, the Mortgagee is generally permitted to proceed with reduced documentation requirements and is not required to perform a standard manual underwriting of the borrower’s credit capacity. However, this status is contingent upon the Mortgagee validating that the data entered into the AUS is true, complete, and consistent with the physical documentation in the loan file. Data integrity is paramount for this classification to hold.

No, a favorable risk score from the TOTAL Mortgage Scorecard does not replace the specific duties of the Mortgagee or the underwriter. The Mortgagee remains solely responsible for the final underwriting decision and must ensure that the mortgage meets all applicable FHA eligibility requirements. While an “Accept” recommendation streamlines the credit review process, the lender must still verify the integrity of all data entered into the system, such as income, assets, and liabilities. If the data entered is incorrect or fraudulent, the risk assessment generated by TOTAL is invalid, and the lender is liable for the endorsement decision.

The Technology Open To Approved Lenders (TOTAL) Mortgage Scorecard is a statistically derived mathematical model developed by HUD to assess the credit risk of FHA loan applicants. It is not an Automated Underwriting System (AUS) itself; rather, it interfaces with approved AUS platforms to evaluate credit variables. The scorecard processes data regarding the borrower’s credit history, reserves, and loan application details to render a risk assessment. This assessment helps determine the level of documentation and underwriting review required. However, the scorecard strictly evaluates credit risk and does not determine the eligibility of the mortgage under specific FHA program requirements, which remains the lender’s responsibility.