The Department of Housing and Urban Development has received its share of a $14.5 million settlement agreed to by Gateway Funding Diversified Mortgage Services to resolve allegations of failing to comply with FHA rules.
As it curtails the use of the False Claims Act to stop fraud in FHA lending, the Department of Housing and Urban Development is turning to technology to bring enforcement action and hold lenders accountable for harmful business practices, according to attorneys.
Many of the loans with lower credit scores and higher debt-to-income ratios that get flagged for manual underwriting under FHA’s revised Technology Open to Approved Lenders (TOTAL) Mortgage Scorecard likely will not get endorsed, analysts said. [Includes one data chart.]
Carson to Leave HUD After Trump’s First Term; Ginnie Annual Summit Set; Regulators Reject Request for Hearing on Appraisal Threshold; VA Announces Special Relief for Alabama.
In an effort to streamline its lending process, the FHA has scrapped the requirement of a 10-year protection plan for newly constructed single-family homes, according to guidelines released this week.
FHA lenders can now outsource verification of a borrower’s employment, income and other assets to third-party vendors. The new guidance, which came into effect on Feb. 15, applies to all FHA forward mortgages and Home Equity Conversion Mortgage loans.
Ginnie Mae’s latest guidance raising the minimum servicing spread will have little impact because most servicers already retain well above the minimum requirement, according to analysts with Keefe, Bruyette & Woods.
FHA has tweaked its mortgage scorecard to address concerns surrounding loans with higher-risk characteristics such as cash-out refinances and high debt-to-income ratios.
Lenders will no longer be able to edit appraisals in FHA’s Electronic Appraisal Delivery portal. They will have to submit a corrected appraisal to update the field.
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