May 27th, 2019 10:33 AM by Jackie A. Graves, President
The number of
traditional banks that participate in the Federal Housing Administration’s
single-family mortgage insurance program has declined since the housing crisis.
Banks have contributed to just 13% of the FHA’s origination volume, down from
44% in 2010, according to a recent report in Housing Wire. Banks have feared
strict penalties and that even a minor error could expose them to fines.
more bank originations, the agency says it's clarifying lender certification
requirements to open up more competition and financing choices for
borrowers, particularly first-time and minority home buyers.
Thursday, the FHA released proposed rules seeking to clarify its loan-level and
annual lender-level certifications on compliance documents from lenders, which
it hoped would ease some banks’ compliance concerns. Among the proposed
changes, the FHA clarified what constitutes a defective loan and how problems
can be remedied.
become clear that our lending partners are seeking clarity and greater
certainty when documenting compliance with FHA requirements,” says Brian
Montgomery, acting deputy secretary of the U.S. Department of Housing & Urban
Development and FHA commissioner. “We are proposing a new, more transparent set
of requirements that will preserve our enforcement authority. We anticipate
that this will encourage more lender participation in FHA business, thus
increasing competition in the market and resulting in greater choices for
addressing these issues will give lenders more confidence in participating in
the FHA program and enable participating lenders to better serve homebuyers
seeking an FHA loan,” Ed DeMarco, president of the Housing Policy Council, told
the rules are finalized, the FHA is accepting public comment on the proposed
changes over the next 30 days.
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