The Department of Housing and Urban Development is working on a new post-endorsement review process for FHA-insured loans that might free FHA lenders from worrying about loans that might default three or five years down the road.
The loan reviews will make sure lenders adhere to FHA origination practices and ensure the Federal Housing Administration is compensated for “defects in the lender manufacturing process.”
In other words, the lender might pay a fine upfront for underwriting and processing defects, but FHA would accept the credit risk going forward. HUD is seeking public comments on this approach until Sept. 9.
Earlier this week, the White House issued a “fact sheet” on the Obama administration’s
“We need to establish more certain, bright-line rules for when government will rescind its guarantees, to give lenders greater clarity and encourage more lending to creditworthy borrowers,” the fact sheet says.
“HUD is working to update its rules along these lines and will work with the Federal Housing Finance Agency and other federal agencies to institute a common framework for government guarantees across the market.”
Meanwhile, FHA is working on a new program to provide financing to borrowers who lost their jobs but are now on the mend.
The “Back to Work” initiative will provide “creditworthy re-employed borrowers with strong recent pay histories” access to FHA financing.
“We should give well-qualified Americans who lost their jobs during the crisis a fair chance to get a loan if they’ve worked hard to repair their credit,” President Obama said in a speech in Phoenix.
