Weicher: FHA Has Enough Power to Police Lenders

The Department of Housing and Urban Development has the necessary legal authority to effectively police Federal Housing Administration lenders that are engaged in abusive or predatory lending, according to FHA Commissioner John Weicher.Mr. Weicher told the Senate Special Committee on Aging that a new regulation to prevent a predatory practice known as "property flipping" has been "successful." Under the new regulation, which went into effect in June, the FHA does not insure loans if the underlying property has been resold within 90 days. "We think we can target the individual [predatory] practices that we see," Mr. Weicher told Sen. Debbie Stabenow, D-Mich. "We haven't felt the need to come to you to request additional legislative authority." Mr. Weicher's written testimony reveals that HUD expects to publish a final rule in the second quarter that would hold FHA lenders responsible for inflated appraisals. However, six trade groups, including the Mortgage Bankers Association, contend that the FHA does not have the legal authority to hold lenders responsible for property value estimates made by independent appraisers.