Proposed legislation would increase oversight of FHA mortgage servicers
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New legislation introduced in Congress is proposing to increase oversight of Federal Housing Administration (FHA) mortgage services in an effort to help prevent foreclosures.
Rep. Maxine Waters (D-Calif.), ranking member of the House Committee on Financial Services, introduced The FHA Foreclosure Prevention Act of 2018, or H.R. 5555.
Under the bill, the Department of Housing and Urban Development would be required to increase its oversight of FHA mortgage lenders to strengthen compliance with the FHA’s loss mitigation requirements. This oversight must include appropriate sampling and review of such compliance and direct information collection from borrowers whose files were sampled.
A complaint and appeals process would also be established to provide borrowers the ability to voice their concerns about unfair treatment. The HUD secretary would also be prohibited from paying FHA insurance benefits to any lender unless it has provided documentation on its compliance with loss mitigation requirements.
“A decade after the devastating foreclosure crisis, we continue to see significant problems with the servicing of FHA loans that unnecessarily put homeowners at risk of foreclosure,” Waters said. “My bill, the FHA Foreclosure Prevention Act, would ensure that FHA servicers help families experiencing financial hardship avoid foreclosure so that they can remain in their homes.”
Sen. Catherine Cortez Masto (D-Nev.) has introduced S. 2698 as a companion measure in the Senate, with Sen. Elizabeth Warren (D-Mass.) as an original cosponsor on the bill.
“As Nevada’s attorney general during the foreclosure crisis, I saw far too many lives turned upside down due to rampant foreclosures, as well as the devastating effects that come with losing one’s home,” Cortez Masto said. “To this day, borrowers are unnecessarily being put at risk of losing their homes because of servicers’ failures to comply with the FHA’s loss mitigation requirements. This bill will implement common-sense measures to give borrowers a fair chance at avoiding foreclosure.”
