Changes to the Adjusted Net Worth Computation for FHA Lenders

Thoughtware Alert Published: Jan 20, 2022
Financial Services Buildings

The U.S. Department of Housing and Urban Development (HUD) recently changed requirements for the calculation of “unacceptable assets,” which are required to be excluded from the adjusted net worth computation disclosure included in the audited financial statements of approved FHA lenders.

An update to Chapter 7 of the HUD Consolidated Audit Guide (2000.04 REV-2 Change 22) was issued on June 25, 2021, and requires all approved FHA lenders to be in compliance with the new requirements by December 31, 2021. On September 30, 2021, HUD issued Mortgagee Letter 2021-25, which summarizes the impact the changes made to Chapter 7 of the HUD Consolidated Audit Guide will have on entities applying to become an FHA lender and approved FHA lenders. On October 7, 2021, HUD published an updated Financial Data Template tool (Version 1.3) to be used to complete the adjusted net worth computation, which includes the new asset categories. 

These changes will require FHA lenders to update calculations for the new definition of “unacceptable assets.” We encourage personnel involved in preparing financial statement disclosures to review the materials issued by HUD to identify changes required in the adjusted net worth computation included in the December 31, 2021, schedule and future schedules. Please reach out to your BKD Trusted Advisor™ to discuss how these changes may impact your year-end adjusted net worth schedule and annual recertification procedures with HUD or submit the Contact Us form below.

Related Thoughtware

Kate & Ben — How can we help you? Contact Us!

How can we help you?