FHA Proposes Lender Certification Changes

The Federal Housing Administration on Monday proposed changes to its lender certification rule in an attempt to clarify when it might seek to recover losses for defective loans.

Among other things, the changes require a lender to certify that it has not been convicted of fraud or other disqualifying crimes within the past three years, except for cases the lender has reported to HUD and for which explicit clearance was given. Similar certification would be required at the individual loan level.

The new loan-level certification requirements are expected to take effect by the end of the year, with the new lender certification standards kicking in early next year.