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Lending

FHA pushes blueprint to help lenders lift credit overlays

BPC Summit: Forward plan to broaden the FHA credit box

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The most important agenda for the Federal Housing Administration moving forward is creating a more transparent blueprint for lenders so that they have more underwriting confidence and can remove some of their credit overlays and lend to a broader credit box for FHA-backed loans.

That’s the word from Assistant HUD Secretary and outgoing FHA Commissioner Carol Galante, speaking to HousingWire while currently attending the Bipartisan Policy Commission’s housing policy summit in Sun Valley, Idaho.

HousingWire is the BPC’s media partner in the mortgage finance trade. The two organizations are joining forces to promote and cover the BPC Housing Commission’s upcoming Housing America’s Future: 2014 Housing Summit next month in Washington, D.C.

“I think we would do well to provide more transparency and clarity over when we are going to ask for indemnification on loans, and even if the rules are clear, one of the challenges is that we are not giving more immediate feedback,” she said. “If they don’t hear from us for three years (it’s a problem.) We need to be more timely in our feedback loop.”

Galante said that she also wants more of a push on FHA’s Homeowners Armed With Knowledge initiative to get more counseling for borrowers.

As to FHA fees – which some panelists like for former Senator Mel Martinez, also in attendance at the summit, said are too low – Galante thinks they are in line.

“We have increased mortgage insurance premium fees six times in the past four years to ensure we are appropriately priced for borrowers,” she said. “I think we are at the tipping point where we are priced appropriately and rebuilding credit quality and to rebuild our capital reserves. I think we are at a good place from that perspective.”

She said finding the right fee level requires constant monitoring and balance.

She is generally pleased with the current FHA funding bill before Congress.

“There are things in the FHA bill that we would like to see happen – some things we are not totally excited about but the bottom line is that we could use some additional tools in flexibility… and we look forward to working with Congress on these issues. We feel like we are moving in the right direction and will continue to do that.”

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