FHA releases new mortgage-lender certifications
Limits bank liability on mortgage defects
The Federal Housing Administration released new certification requirements lenders need to follow when writing up FHA-insured loans in order to protect them from being penalized for underwriting errors.
“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, the principal deputy assistant secretary for the 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. Our goal is 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,” added Golding.
According to the Wall Street Journal, Mortgage Bankers Association President and CEO David Stevens said the changes could “stop the bleeding” of lenders pulling back from the FHA program.
The new clarifications come in after the FHA released its new loan certification plan in September 2015 when the U.S. Department of Housing and Urban Development announced Tuesday a series of proposed changes to the rules for lenders that remit loans to the FHA.
According to HUD’s press release, Golding believes that with improved clarity, compliance will be easier for lenders and “strengthens our ability to hold them accountable.”
The new certification goes into effect August 1, 2016.