Over the last year I’ve listened to market participants, reviewed the data, and seen firsthand the lack of access to affordable credit for qualified families. At FHA, we know we have an important role to play in any solution – so in May, we announced our Blueprint for Access. We set out some pretty big goals for ourselves, outlining steps we would take to improve access to credit for qualified families and make it easier for our partners to do business with us.
Since then, we’ve been hard at work on all parts of the Blueprint. We’re making real progress on our Quality Assurance initiatives and we’ve used our Drafting Table to post sections of the updated Single Family Handbook for feedback. These individual steps all contribute to our overall goal: to improve access to credit for a much wider spectrum of qualified borrowers. So let me give you an update.
Today, we are posting our Loan Quality Assessment Methodology on the Drafting Table for feedback. It proposes a defect taxonomy that will help clarify our thinking on loan manufacturing risk – allowing lenders to understand what defects are most serious and pose the biggest risks to their business. It should also help reassure lenders – they will be able to lend more confidently, knowing what FHA’s expectations are. We’ll be taking feedback on the methodology for the next 30 days – and we need your input. We’re also going to host roundtables and webinars so we have even more opportunities to hear from you.
By the end of the month, we will publish the Origination section of the handbook, which covers the topics of Application through Endorsement. We posted this section for feedback earlier this year. Now, with that feedback incorporated, it will be the first section of the Handbook to become final. This accomplishment brings us another step closer to clarity and certainty for our partners.
And that’s not all the progress we’ve made on the FHA Handbook. This summer we have posted five sections that make important changes aimed at clarifying and consolidating policy and working effectively with FHA.
- Doing Business With FHA andQuality Control, Oversight and Compliance– We posted these sections earlier in the summer. They sections cover a number of important topics including eligibility, approval, and recertification requirements for FHA lenders and mortgagees as well as explaining ongoing lender and mortgagee responsibility to perform institution and loan-level quality control. We’re incorporating feedback now and plan to release final versions this winter.
- Appraiser Requirements – We have just finished accepting feedback on this section and plan to publish a final version which incorporates that feedback sometime this winter. Policy changes include updated instructions for valuation of energy efficiency measures and new requirements to the Market Conditions Addendum. Also see Appraisal Report and Data Delivery Requirements
- 203(k) – Consolidating policy from more than 30 individual documents, this section was posted for review last month and we will be accepting feedback until September 29th. The 203(k) program is FHA’s primary vehicle for the rehabilitation and repair of single family properties. This section of the handbook includes automating the collection of certain data, clarifies policies for calculation the Mortgage Insurance Premium (MIP), and outlines establishing an Adjusted As-Is Value.
- Servicing – Most recently, we posted the Servicing section for feedback. It covers actions post-endorsement through the end of the insurance contract and includes general requirements, servicing of both performing and defaulted loans, and HUD’s Loss Mitigation Program. We’ll be taking feedback on it through October 17th. This is the beginning of a larger discussion on our long-term goals for servicing policy with the industry.
These changes ultimately move us much closer to a single, authoritative guide on working with FHA. These pieces are all giant steps forward as we meet our goals to clarify policy, make it easier for our partners to do business with us, and improve compliance with FHA requirements. I look forward to keeping you updated as FHA drives towards our next Blueprint goals.