The American Bankers Association joined three other financial and housing trade organizations last week in a comment letter to the Federal Housing Administration offering feedback on proposed changes to its single-family loan and lender-level certifications. FHA proposed the changes last month in an effort to encourage greater bank participation in the program.
The groups pointed out that the current framework requires lenders to attest to their absolute compliance without any qualifiers, holding lenders “to an impossible-to-meet standard of strict adherence to all program requirements” and ultimately dissuading many from participating in the program due to liability concerns.
In the letter, the groups called on FHFA to either rescind the annual certification requirement or replace the current annual certifications with “a certification that reinforces the obligation of each mortgagee to establish and operate in accordance with a corporate risk management plan.” They added that such an approach “would more meaningfully foster compliance by each mortgagee with FHA requirements.”
