4 FHA priorities from new commissioner Dana Wade

Federal Housing Administration Commissioner Dana Wade has three main priorities, which she shared with women working in the mortgage industry Tuesday: ensuring the FHA fulfills its countercyclical role, maintaining the health of the Mutual Mortgage Insurance Fund, and taking care of her family.

In a wide-ranging talk at a virtual event held by Women in Housing Finance Tuesday, Wade shared details of how she plans to fulfill these goals, and fielded questions from attendees about FHA policies that could play into their business plans in the coming year. The following are some key points that arose from the discussion.

The FHA is considering building validation services technology

In the interest of giving mortgage companies “more clarity on the day of origination,” Wade said she would like to see quicker validation of borrower information through bank data and other sources. When asked if she would consider a technology initiative similar to Fannie Mae’s Day1 Certainty program or Freddie Mac’s Loan Advisor Suite, which both validate data, Wade said, “That’s 100% what we’re leaning toward.”

More defect taxonomy changes are in the works

FHA has looked to give lenders more certainty regarding their standing with compliance. Improving its defect taxonomy will be a key step in doing so, Wade said.

The FHA will continue the process of improving its error classification system in order to foster clearer communication regarding compliance, she said. The administration also plans to apply such improvements to the servicing sector as part of its broader efforts to streamline its practices in that sector, Wade said.

The FHA is considering separating HECMs from the main MMI fund

When asked about FHA’s Home Equity Conversion Mortgage program, Wade noted that while HECMs can help senior borrowers who may be facing challenges due to the coronavirus, they are “complicated” and HECM performance has not been as strong as the FHA’s traditional mortgage programs.

She also said that she likes the notion of removing the FHA’s reverse mortgage program from the main MMI fund.

FHA will keep credit flowing but is unlikely to lower premiums to do so

The Federal Housing Administration is focused on helping borrowers put most at risk by the pandemic and the related economic downturn. But it has to balance that against the need to ensure the MMI fund remains capitalized, Wade said.

“The population of borrowers that FHA serves are more adversely affected by COVID-19. It’s … important that we stay vigilant and able to respond to any challenge. We’re constantly looking at credit availability and where FHA needs to step in,” she said.

Wade noted that the FHA is particularly concerned about helping minority borrowers who comprise roughly 40% of its market, and first-time homebuyers who comprise more than 80%.

While many would like to see a change to premiums in order to help those borrowers, it’s not a move Wade would favor, she said.

“I think there are other tools,” said Wade, noting that the fund relies on premiums to build capital.