While the effort to provide lenders more leniency around FHA-backed loans is appreciated, one associations believes more clarity is needed before those products are once again fully embraced by the industry
The banks have already expressed reservations about the FHA’s compromise, and now the head of an industry association is calling for more details around the proposal.
"The language in the certification … lacks clarity as to the insurability of a loan and doesn't embody a reasonable diligence standard for FHA underwriters, address the significance of any errors in terms of risk to the FHA, or allow for an opportunity for lenders to correct any mistakes, regardless of how minor they may be,” David Stevens, president & CEO of the Mortgage Bankers Association, said in a release. “This lack of clarity continues to leave the door open to possible enforcement actions, and also encourages federal agencies, other than FHA, to take action against lenders.”
Without that clarify, Stevens argues lenders may continue to crack down on their FHA lending for fear of attracting potentially costly legal attention.
The Federal Housing Administration is proposing new documents that allow room for errors, while still giving the government the ability to pursue damages in the event of significant mistakes, according to the Wall Street Journal.
“In the end, we believe our efforts to expand access to credit for responsible borrowers are making a difference,” FHA Head Edward Golding said on a conference call.
Mortgage lenders reported $113 billion in FHA mortgages in the first half of the year – a 66% year-over-year spike, according to Inside Mortgage Finance. Despite this, only half of the top FHA lenders in 2013 still operate in that space due to the increase in penalties that have forced them to shy away.
And it appears that business will continue to shrink unless the government better addresses the concerns of the associations and the banks.
“MBA looks forward to providing further comment and will continue to work with various stakeholders, including FHA, to foster a lending environment which protects consumers and encourages lenders to lend to responsible, qualified borrowers,"
"The language in the certification … lacks clarity as to the insurability of a loan and doesn't embody a reasonable diligence standard for FHA underwriters, address the significance of any errors in terms of risk to the FHA, or allow for an opportunity for lenders to correct any mistakes, regardless of how minor they may be,” David Stevens, president & CEO of the Mortgage Bankers Association, said in a release. “This lack of clarity continues to leave the door open to possible enforcement actions, and also encourages federal agencies, other than FHA, to take action against lenders.”
Without that clarify, Stevens argues lenders may continue to crack down on their FHA lending for fear of attracting potentially costly legal attention.
The Federal Housing Administration is proposing new documents that allow room for errors, while still giving the government the ability to pursue damages in the event of significant mistakes, according to the Wall Street Journal.
“In the end, we believe our efforts to expand access to credit for responsible borrowers are making a difference,” FHA Head Edward Golding said on a conference call.
Mortgage lenders reported $113 billion in FHA mortgages in the first half of the year – a 66% year-over-year spike, according to Inside Mortgage Finance. Despite this, only half of the top FHA lenders in 2013 still operate in that space due to the increase in penalties that have forced them to shy away.
And it appears that business will continue to shrink unless the government better addresses the concerns of the associations and the banks.
“MBA looks forward to providing further comment and will continue to work with various stakeholders, including FHA, to foster a lending environment which protects consumers and encourages lenders to lend to responsible, qualified borrowers,"
