On May 18, FHA posted a draft Mortgagee Letter on its Single Family Drafting Table, proposing new requirements for determining borrower eligibility related to delinquent child support obligations subject to federal administrative offset. The draft proposes an automated screening process through FHA Connection (FHAC) that would check borrowers against Treasury’s “Do Not Pay” (DNP) portal to identify those subject to the federal offset program. Under federal law, individuals with delinquent federal non-tax debt or those subject to federal administrative offset for delinquent child support are prohibited from receiving federal financial assistance, including FHA-insured mortgages. Borrowers identified as subject to offset would be ineligible for FHA-insured financing until the delinquency is resolved. FHA stated that connecting FHAC to the DNP portal will support eligibility determinations and protect the integrity of federal programs.

The draft also proposes simplifying existing requirements for borrowers with delinquent federal non-tax debt, including requirements related to the “Credit Alert Verification Reporting System,” by eliminating what the agency characterized as procedural redundancies without substantively changing borrower eligibility requirements. The proposed changes apply to all FHA Title II Single Family forward and Home Equity Conversion Mortgage programs. Stakeholders may submit feedback through June 18.