FHA issued Mortgagee Letter 2025-01, updating Defect Taxonomy to include Servicing Loan Reviews. Per the Mortgagee Letter (ML), FHA updated the Single Family Housing Policy Handbook 4000.1, Appendix 8.0 – FHA Defect Taxonomy (Defect Taxonomy) with revised introductory sections and new content focused on Title II servicing loan reviews. The updated Defect Taxonomy includes:
- 6 defect areas covering FHA requirements through the servicing lifecycle;
- Severity tier descriptions with common characteristics and distinctions based on the practical impact of non-compliance;
- Expanded, servicing-specific remedies aligned with severity tiers for each defect area; and
- Revised introductory sections that apply to both underwriting and servicing reviews.
The updated Defect Taxonomy is effective for Title II loan reviews initiated on or after January 15, 2025.
Click to view the FHA Mortgagee Letter 2025-01: https://www.tenaco.com/wp-content/uploads/2025/01/FHA-Mortgagee-Letter-2025-01-01-07-25.pdf
Click to view the FHA Info 2025-01: https://www.tenaco.com/wp-content/uploads/2025/01/FHA-Info-2025-01-01-07-25.pdf
