• Housing Policy Council

HPC Applauds HUD's Decision to Improve FHA's Compliance Policies

HPC has issued the following statement applauding HUD’s decision to improve FHA’s compliance policies:

Washington, D.C. – The Housing Policy Council (HPC) applauds today’s announcement by the Department of Housing and Urban Development (HUD) and Federal Housing Administration (FHA) to adopt meaningful and substantive improvements to the FHA compliance framework. The changes demonstrate the Administration’s commitment to enhance and update key elements of FHA’s core risk management policies and practices, a welcome and important step forward in FHA’s revitalization efforts.


The approach advanced by HUD and FHA is a clear indication that the agency recognizes the importance of providing clarity and certainty to the lending community, to encourage broader participation in the FHA program and expanded consumer choice. With this announcement, FHA has updated critical certification documents used in lender oversight and loan-level review processes and established an explicit nexus to FHA’s quality control standards and remedies for deficiencies.


This compliance framework is bolstered by the long-standing FHA enforcement regime, the Mortgagee Review Board (MRB), which will now play a more active role in the management of cases that warrant False Claims Act consideration by the Department of Justice (DoJ). The definition and delineation of roles and responsibilities between these government agencies ensures that resources are used wisely and effectively to monitor performance and take appropriate enforcement action, as necessary.


Housing Policy Council Chairman and Mortgage Division President for U.S. Bank, Tom Wind said of the changes, “This set of enhancements to FHA’s compliance policies demonstrates to the industry that the legal team at HUD appreciates the need for lenders to operate with confidence in the FHA program. We commend the Department for these changes.”


The new certifications, updated loan quality review standards, and HUD-DoJ Memorandum of Understanding reinforce the objective of FHA to ensure that FHA rules be consistently interpreted and enforced by HUD and other regulatory bodies. Lenders rely on uniform application of lender performance and loan quality measures by FHA. Consistency of

application permits lenders to accurately calibrate their own compliance and quality control procedures.


“HUD’s announcement today is a very positive step for FHA, moving the agency towards a more fair and transparent enforcement regime that brings a new level of clarity to FHA lending,” said Ed DeMarco, HPC President.


The Housing Policy Council and its member companies are strong promotors of FHA lending as a critical component of the housing finance marketplace. Over the last decade, as a result of increasingly unpredictable and inconsistent compliance and enforcement at HUD and DoJ, many lenders retreated from using the FHA program. The changes announced today address those issues and signal a positive and significant step in FHA’s strategy to rejuvenate the program, improve the health of the fund, and enhance the agency’s risk management capabilities.

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