March 15th, 2019 9:07 AM by Jackie A. Graves, President
Makes good on promise to streamline
The Federal Housing Administration has
taken steps to reduce some of the regulatory burdens that belabor the lending
process, releasing two mortgagee letters Tuesday with updated guidelines on
home warranty and inspection requirements for single-family FHA loans.
Letter 2019-04 eliminates the FHA Inspector Roster in order to
expand the pool of inspectors for lenders.
The FHA said
industry standards and local regulations are sufficient enough to ensure
inspector qualifications, making FHA’s standards redundant.
“There is no
longer a need for HUD to maintain and administer its own standardization
process for inspectors,” the mortgagee letter stated.
Letter 2019-05 streamlines guidelines for home warranties by
eliminating the requirement that borrowers purchase 10-year protection plans
for new construction homes, reducing expenses for the borrower.
The FHA said
homebuyer and builder’s one-year Warranty of Completion of Construction
provides enough assurance that the home was built properly and the borrower is
Under the one-year warranty, the FHA said "the warrantor
agrees to fix and pay for the defect and restore any component of the home
damaged in fulfilling the terms and conditions of the warranty."
Commissioner Brian Montgomery said in a LinkedIn post on
Wednesday that the moves were part of an overall effort to enhance procedures
after arriving back at FHA in June 2018, I indicated one of our goals was to
streamline and update our program guidelines and procedures,”
“In parallel with the Administration’s objectives of reducing regulatory
barriers, late yesterday we released two Single Family Mortgagee Letters
(2019-04 and 2019-05) where we’ve eliminated two unnecessary and outdated
regulations that have been barriers for lenders.”
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