So what else is new? Lenders are already buckling under the dual mandates from HUD FHA to 1. Make more loans and make it easier to get a loan and, 2. Follow the ever-increasing restrictions and tightening guidelines on each and every loan. And if they miss just one, HUD FHA will try to make them buy the loan back.
Very recently, The Department of Housing and Urban Development, HUD, pushed for increased authority and new regulations to be able to force certain lenders to indemnify or reimburse the Federal Housing Administration, FHA, and buy back nonperforming mortgages!
HUD wants to require all existing and new lenders who are able to write and insure mortgages on behalf of HUD to meet even stricter requirements and performance standards. HUD is saying that they need these new ‘performance standards' to gain and maintain approval status.
Current FHA commissioner, David Stevens said, "It's important that our expectations are crystal clear. We need to clarify which circumstances we'll require indemnification and the level of loan performance we expect lenders to maintain."
According to HUD's new proposal, lenders would have to maintain a claim and default rate at or below 150% for the previous two years.
This is getting just downright ridiculous. How can anyone predict what will happen in the lives of borrowers? Who can say, during the underwriting process, who will lose their jobs, what families will lose both of their jobs, who will have a major health crisis? all examples of of events that could cause a default.
The new proposal also would allos HUD to give FHA approval to one-state only lenders under different standards. Current guidelines gives HUD unconditional and direct endorsement to lenders who can self insure their own mortgages and hold a default claim rate at or below 150% of the national average for the previous two years.
It is easy to see what HUD is doing. For a lender who has met the previous HUD standards and guidelines over the past two years, they must now perform one half times better then they have performed, even though the past performance was inside of HUD's own guidelines.
HUD needs to take its blinders off and remember what they are supposed to be doing. Helping American families buy a home.
Andy Brown, "Not just another mortgage guy..."
Fidelity Funding Mortgage Corp
407-472-3443 888-774-4410 ext 232
ABrown@GoFFMC.com
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