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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