8.1 Introduction

A. This chapter is designed to explain FHA’s underwriting criteria for determining the creditworthiness of a Principal, i.e., the Principal’s capacity of credit, experience and financial histories. It also covers determining the maximum insurable mortgage as well as other financial requirements for issuing a Firm Commitment and closing under the different sections of the National Housing Act.

B. Principals of the borrowing entity and of other entities participating in FHA multifamily mortgage insurance programs must have a positive credit history demonstrating that they will honor their legal, financial and contractual obligations. All Principals must be identified and analyzed with respect to their creditworthiness. Regulatory standards established in the Code of Federal Regulations (24 C.F.R.) Part 200 Subpart H Participation and Compliance Requirements determine the appropriate review of previous participation in multifamily insured programs, based upon past performance and other aspects of a Principal’s records.

C. In certain standards addressed in this chapter, separate policy has been developed for Low Income Housing Tax Credit projects and this policy is presented in Chapter 14. If apparent conflicts arise between this Chapter and Chapter 14, Chapter 14 guidance will prevail in the underwriting of Tax Credit Projects.