On May 19, the Federal Housing Administration (FHA) posted a draft Mortgagee Letter (ML), entitled “Updates to Borrower Eligibility Requirements,” for review and feedback on the FHA Single Family Drafting Table. The draft ML proposes new requirements for determining eligibility for borrowers with delinquent child support subject to federal administrative offset through an automated process to be implemented in the FHA Connection (FHAC) technology system.  

Federal law prohibits providing federal financial assistance, including FHA-insured mortgages, to individuals with delinquent federal non-tax debt or who are subject to federal administrative offset due to delinquent child support obligations.

To ensure compliance with federal mandates, FHA is proposing an automated screening process through the U.S. Department of the Treasury’s Do Not Pay (DNP) portal to identify borrowers subject to the federal offset program, who would be ineligible for FHA-insured financing until the delinquency is resolved. By connecting FHAC to the DNP portal, FHA said it will be able to support eligibility determinations, protect the integrity of federal programs and promote responsible stewardship of public funds.

Additionally, the draft ML proposes to simplify existing requirements for borrowers with delinquent federal non-tax debt, including requirements for use of the Credit Alert Verification Reporting System, by removing unnecessary language on procedural redundancies without substantively changing the requirements. 

Feedback will be accepted through June 18, using the instructions posted on the FHA’s website.  

Mortgagees and other parties interested in FHA transactions should contact the FHA Resource Center with questions or via email to [email protected].