The Mortgage Bankers Association wants regulatory relief for lenders that rely on underwriting decisions made by FHA's 'TOTAL Scorecard' program, including an exemption from the agency's Neighborhood Watch system which displays the delinquency performance of individual firms.
In particular, the trade group, in a new report on recommendations for FHA and GNMA, says it wants representation and warranty relief. "This policy would be similar to the rep and warrant relief that Fannie Mae and Freddie Mac provide to lenders that use their AU systems," it says.
The Federal Housing Administration's TOTAL Scorecard was developed by HUD to evaluate the credit risk of FHA loans that are submitted to an automated underwriting system.
Mortgage bankers fear that in coming quarters they may be hit with loan purchase buybacks on FHA loans similar to what they're going through with Fannie Mae and Freddie Mac.
The recommendations were shaped by MBA's 'Council on the Future of FHA and Ginnie Mae,' a group that convened in November of last year. The council consists of senior executives from 27 companies, including megabanks and small independent mortgage firms.
Although MBA desires regulatory relief, it also wants FHA to hire additional workers to handle the huge increase in volume it has experienced over the past two years.
Among its recommendations, mortgage bankers want the agencies to update their technology, review the FHA loan limit cap, strengthen its reverse mortgage product, and provide the agency with the expanded authority to increase premiums.
