FHA Protects Banks From Mortgage Errors

New Provisions May Help Those with Bad Credit Receive Government-Backed Loan

FHA Protects Banks From Mortgage Errors
March 16, 2016

The Federal Housing Administration (FHA) released its revised lender certification requirements on March 15. These new requirements outline the risks lenders are taking on and the risks for which they are specifically not at fault, which includes any minor mistakes on loans. FHA principal deputy assistant secretary, Ed Golding, summarized the changes as a clarification on what lenders are actually certifying to and what types of mistakes the FHA will not pursue.

This clarification comes after the new loan certification plan the FHA released in September 2015. That plan made many uneasy because the language in it suggested that it would be much easier for lenders to be penalized for minor mortgage and loan errors. Golding made it clear that the FHA will only involve the Justice Department in cases for errors that “would have altered the decision to approve the loan.” He went on to state that while the FHA wants lenders to do everything possible to make sure the information on every loan is accurate, they do recognize that mistakes can happen.

The released certification plan will not go into effect until August 1.

The FHA has also announced a new annual lender certification plan that must be signed by company executives. This certification guarantees that the lender is not involved in any type of fraud or other criminal activities. The plan will be posted for comments for thirty days and may be revised following this feedback period.

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Steffanie | 03.16.16 @ 18:01
This is great news in case a mistake is made. Glad they have a safety net in place.
Beverly | 03.16.16 @ 18:02
I suppose this is a good thing, depending on what they consider minor........where does the consumer come in to play with these errors and how does it effect them?? Interesting to say the least.
Erin | 03.16.16 @ 18:02
I'm glad that confusion was cleared up. It's a great idea to strike a balance between consumers and lenders so neither one is penalized too harshly.
Carla | 03.16.16 @ 18:03
I'm glad the FHA is looking out for the lenders and the people in the mortgage process. It gives me a little peace of mind reading this.
irene | 03.16.16 @ 18:05
I suppose this could be a good thing, as far as safety
Elaine | 03.16.16 @ 18:08
Happy to hear that things are being cleared up. Makes me wonder how the consumer will be affected by these issues.
Nancy | 03.16.16 @ 18:08
The system protects the banks from errors, what protects the consumer from errors?
gracie | 03.16.16 @ 18:08
I think that this is fantastic news. I am anxious to see more of these better loan programs put inot place to make sure buyers don't find themselves underwater.
Sara | 03.16.16 @ 18:10
This is actually good news. There should always be safety nets for people when mistakes happen. Because yes mistakes will happen in anything.
$commenter.renderDisplayableName() | 11.28.20 @ 10:34