In a recent letter, FHA said it is dropping a requirement that small federally regulated depositories submit annual internal control and compliance reports.
Those reports require management to hire accountants or auditing firms, which is expensive for many institutions that originate a handful of FHA loans a year.
Some banks that were approved mortgagees dropped out of the FHA program because they couldn’t afford it, according to Ron Haynie at the Independent Community Bankers of America.
“This is huge,” Haynie said. “It will be interesting to see how many will want to get their Eagle back. I imagine some will because it was a good source of business for a lot of community banks,” he added. Haynie is the executive vice president for ICBA Mortgage Services.
Back in 2009, FHA cracked down on small depositories by requiring audited financial reports as well as internal control and compliance reports.
Under pressure from their trade association, FHA decided in April 2011 to allow community institutions to submit their unaudited call reports required by their federal regulators in lieu of financial reports prepared by independent accountants.
In late December, FHA dropped the other audit requirement. “This Mortgage Letter (2012-29) eliminates the requirement for small supervised lenders to submit internal control and compliance reports.”