FHA Revises Loan-Level Certification Form
The Federal Housing Administration last week announced long-anticipated changes to its loan-level certification form.
The changes resulted from concerns voiced by the Mortgage Bankers Association and other industry groups that the original changes created uncertainty over liability and a lack of clarity that could prevent lenders from originating FHA-insured loans.
“This certification includes a few other notable revisions including changes that clarify the lender is certifying to what they know to be true to the best of their knowledge,” said Ed Golding, principal deputy assistant secretary for housing and head of FHA. “The certification is not intended to hold lenders responsible for mistakes or fraud committed by a third party that the lender did not or could not have had reason to know of.
Golding said FHA’s goal was to make sure that lenders make every effort to obtain accurate information and to validate that information, “but also recognize that due to the complexity of putting a home loan together, minor errors in information may occur from time to time. Additionally, we have removed references to the pre-endorsement re-view requirement and have made the certification consistent with the policies in our updated FHA Handbook.”
MBA President and CEO David Stevens, CMB, issued a statement.
“We appreciate FHA’s efforts to increase certainty in the underwriting and processing of FHA-insured mortgages, and on first review this language appears to be an improvement over the previous lender and loan-level certifications,” he said. “The ability to serve and support sustainable and affordable homeownership has been a core mission of both FHA and lenders across this country. Having the confidence to lend demands clear and reasonable accountability. This has been the goal of all stakeholders.”
Stevens said individual lenders will need to review the new certifications, assess the legal and reputational risks associated with FHA lending and determine whether the new language provides sufficient protection to allow them to responsibly expand liquidity for FHA lending. “Similarly we intend to study these updated requirements and we look forward to continuing to work with FHA and other stakeholders to strengthen the housing market and provide access to sustainable mortgage credit for qualified borrowers,” he said.
FHA provided the following links:
Announcement
http://portal.hud.gov/hudportal/documents/huddoc?id=FTDO03152016.pdf
Proposed Revisions to FHA Lender-Level Certifications
http://portal.hud.gov/hudportal/documents/huddoc?id=SFH_LenderCertText.pdf
Comparison Document-Proposed Revisions to FHA Lender-Level Certifications
http://portal.hud.gov/hudportal/documents/huddoc?id=SFH_LenderCertCompare.pdf
Lender-Level Certifications Summary of Public Comments
http://portal.hud.gov/hudportal/documents/huddoc?id=SFH_LenderCertSummary.pdf
