HUD Mortgagee Letter 2025-04

hud-ml-2025-04

HUD Mortgagee Letter 2025-04. See obligation entries for operative requirements and verbatim primary-source citations.

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source:
  type: regulation
  id: hud-ml-2025-04
  authority: HUD Mortgagee Letter 2025-04
  description: |
    HUD Mortgagee Letter 2025-04. See obligation entries for operative
    requirements and verbatim primary-source citations.
obligations:
  - id: hud-ml-2025-04-boarder-income-eligibility
    canonical_id: hud-ml-2025-04-boarder-income-eligibility
    section: 'HUD ML 2025-04 — Boarders of the Subject Property: Eligibility Standard'
    description: |
      Where [LENDER] uses Rental Income from Boarders of the subject Property
      to qualify the Borrower, [LENDER] may consider that income as Effective
      Income only if the occupying Borrower has a 12-month history of
      receiving income from Boarders and is currently receiving Boarder income.
    type: do
    audit_question: For every FHA-insured loan where [LENDER] used Rental Income from Boarders of the subject Property as Effective Income, can [LENDER] evidence (a) the occupying Borrower's 12-month history of receiving Boarder income and (b) that the Borrower is currently receiving Boarder income?
    program_review: Does the program account for the Boarder-income eligibility condition — using Boarder Rental Income as Effective Income only where the occupying Borrower has a 12-month history of receiving it and is currently receiving it?
    file_review: Spot-check Boarder-income files; confirm the occupying Borrower's 12-month history and current receipt of Boarder income.
    judgment: false
    feeds:
      - hud-ml-2025-04-boarder-income-documentation
    workflow_phase: underwriting
    owner_role: compliance_officer
    secondary_owner_role: default_servicing_analyst
    cadence: per-loan
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - hud-ml
      - fha
      - underwriting
      - income-qualification
      - boarder-income
      - promoted
    primary_source:
      tier: 1
      authority: HUD ML 2025-04 — Boarders Standard (II.A.4.c.xii(I)(4)(b) / II.A.5.b.xii(I)(4)(b))
      source_class: hud-ml-pdf
      source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/2025-04hsgml.pdf
      snapshot_id: cfac511a30f18cec
      fetched_at: '2026-05-22T19:55:00Z'
      content_hash: sha256:b1289a8d056b339209f694446db8205b067ec31734f2a0323e8f1a30307b8260
      paragraph_quote: |-
        Rental Income from Boarders may be considered Effective Income if the 
        occupying Borrower has a 12-month history of receiving income from 
        Boarders and is currently receiving Boarder income.
      drafter_attestation: |
        Copied verbatim from snapshot cfac511a30f18cec (content.txt) at
        2026-05-22T20:28Z. Substring is the (b) Standard eligibility for
        Boarder Rental Income under ML 2025-04 (applies to both TOTAL and
        Manual underwriting paths).
    promoted_at: '2026-05-22T20:17:42+00:00'
    promoted_from: hud-ml-2025-04-roundb-v1.yaml
  - id: hud-ml-2025-04-boarder-income-documentation
    canonical_id: hud-ml-2025-04-boarder-income-documentation
    section: 'HUD ML 2025-04 — Boarders of the Subject Property: Required Documentation (II.A.4.c.xii(I)(4)(c) / II.A.5.b.xii(I)(4)(c))'
    description: |
      Where [LENDER] qualifies the Borrower using Rental Income from Boarders,
      [LENDER] must verify and document the existing Rental Income by
      obtaining (i) evidence of rental history over the previous 12 months;
      (ii) evidence of Rental Income received from Boarders for at least nine
      of the most recent 12 months (via Tax Returns or bank statements,
      canceled checks, or deposit slips); (iii) evidence that the Boarder's
      address is the same as the Borrower's address; and (iv) a copy of the
      executed written agreement documenting the boarding terms and the
      Boarder's intent to continue boarding with the Borrower.
    type: do
    audit_question: For every FHA-insured loan qualifying with Boarder Rental Income, can [LENDER] produce from the loan file (a) 12-month rental-history evidence, (b) Tax Returns or bank statements/canceled checks/deposit slips showing Boarder income for at least 9 of the most recent 12 months, (c) evidence the Boarder's address matches the Borrower's, and (d) the executed written boarding agreement?
    program_review: Do the P&Ps ensure Boarder Rental Income is documented with (i) 12-month rental history, (ii) Boarder income for at least 9 of the most recent 12 months (Tax Returns / bank statements / canceled checks / deposit slips), (iii) Boarder address matching the Borrower's, and (iv) the executed written boarding agreement?
    file_review: Pull Boarder-income files; confirm all four documentation items are present in the loan file.
    judgment: false
    feeds: []
    workflow_phase: underwriting
    owner_role: compliance_officer
    secondary_owner_role: default_servicing_analyst
    cadence: per-loan
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - hud-ml
      - fha
      - underwriting
      - income-documentation
      - boarder-income
      - promoted
    primary_source:
      tier: 1
      authority: HUD ML 2025-04 — Required Documentation
      source_class: hud-ml-pdf
      source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/2025-04hsgml.pdf
      snapshot_id: cfac511a30f18cec
      fetched_at: '2026-05-22T19:55:00Z'
      content_hash: sha256:b1289a8d056b339209f694446db8205b067ec31734f2a0323e8f1a30307b8260
      paragraph_quote: |-
        The Mortgagee must verify and document the existing Rental Income 
        from Boarders by obtaining the following:
      drafter_attestation: |
        Copied verbatim from snapshot cfac511a30f18cec (content.txt) at
        2026-05-22T20:28Z. Substring is the headline of (c) Required
        Documentation; the four documentation elements are enumerated in
        description.
    promoted_at: '2026-05-22T20:17:42+00:00'
    promoted_from: hud-ml-2025-04-roundb-v1.yaml
  - id: hud-ml-2025-04-boarder-income-30pct-cap
    canonical_id: hud-ml-2025-04-boarder-income-30pct-cap
    section: 'HUD ML 2025-04 — Boarders of the Subject Property: Calculation Cap'
    description: |
      The amount of Rental Income from Boarders [LENDER] uses as Effective
      Income must not exceed 30 percent of the total monthly Effective Income
      used to qualify the Borrower.
    type: monitor
    audit_question: For every FHA-insured loan qualifying with Boarder Rental Income, can [LENDER] demonstrate that the Boarder Rental Income amount used as Effective Income did not exceed 30 percent of total monthly Effective Income?
    program_review: Do the P&Ps ensure Boarder Rental Income used as Effective Income does not exceed 30% of total monthly Effective Income used to qualify the Borrower?
    file_review: Pull Boarder-income files; confirm the Boarder income used was <= 30% of total monthly Effective Income.
    judgment: false
    feeds: []
    workflow_phase: underwriting
    owner_role: compliance_officer
    secondary_owner_role: default_servicing_analyst
    cadence: per-loan
    consequence: ''
    tags:
      - round-b
      - regulator-direct
      - hud-ml
      - fha
      - underwriting
      - income-cap
      - boarder-income
      - promoted
    primary_source:
      tier: 1
      authority: HUD ML 2025-04 — Calculation of Effective Income
      source_class: hud-ml-pdf
      source_url: https://www.hud.gov/sites/dfiles/OCHCO/documents/2025-04hsgml.pdf
      snapshot_id: cfac511a30f18cec
      fetched_at: '2026-05-22T19:55:00Z'
      content_hash: sha256:b1289a8d056b339209f694446db8205b067ec31734f2a0323e8f1a30307b8260
      paragraph_quote: |-
        The amount of the Rental Income from Boarders used as Effective 
        Income must not exceed 30 percent of the total monthly Effective 
        Income used to qualify the Borrower.
      drafter_attestation: |
        Copied verbatim from snapshot cfac511a30f18cec (content.txt) at
        2026-05-22T20:28Z. Substring is the (d) Calculation of Effective
        Income 30-percent cap of ML 2025-04.
    promoted_at: '2026-05-22T20:17:42+00:00'
    promoted_from: hud-ml-2025-04-roundb-v1.yaml
_promotion_history:
  - promoted_at: '2026-05-22T20:17:42+00:00'
    candidate_path: obligations\_remediation\_round_b_drafts\hud-ml-2025-04-roundb-v1.yaml
    candidates_promoted: 3
    candidates_skipped_existing: 0

Verbatim regulatory text (3)

Verbatim provisions from HUD Mortgagee Letter 2025-04 — each quote is a verified substring of the regulator-published source snapshot, not retyped. Quoted for reference; this is not legal advice. The operational layer (P&P updates, prompts) lives in the regulation update kits.

HUD ML 2025-04 — Boarders of the Subject Property: Eligibility Standard

Rental Income from Boarders may be considered Effective Income if the occupying Borrower has a 12-month history of receiving income from Boarders and is currently receiving Boarder income.

Source: HUD ML 2025-04 — Boarders Standard (II.A.4.c.xii(I)(4)(b) / II.A.5.b.xii(I)(4)(b)) · source URL · snapshot cfac511a30f18cec

HUD ML 2025-04 — Boarders of the Subject Property: Required Documentation (II.A.4.c.xii(I)(4)(c) / II.A.5.b.xii(I)(4)(c))

The Mortgagee must verify and document the existing Rental Income from Boarders by obtaining the following:

Source: HUD ML 2025-04 — Required Documentation · source URL · snapshot cfac511a30f18cec

HUD ML 2025-04 — Boarders of the Subject Property: Calculation Cap

The amount of the Rental Income from Boarders used as Effective Income must not exceed 30 percent of the total monthly Effective Income used to qualify the Borrower.

Source: HUD ML 2025-04 — Calculation of Effective Income · source URL · snapshot cfac511a30f18cec