NCRC Reacts to HUD’s New Proposed Revisions to Lender Certification for FHA-Insured Mortgages

Washington, DC – Today, in reaction to the U.S. Department of Housing and Urban Development’s (HUD) new proposed revisions to the loan-level certifications made by lenders on mortgages insured by the Federal Housing Administration (FHA), the National Community Reinvestment Coalition’s (NCRC) President and CEO John Taylor made the following statement:

“The proposed revisions are a positive step towards balancing the need to provide and expand mortgage access for working people with the need to assure quality controls are in place to protect the FHA Mutual Mortgage Insurance Fund against losses. But still more should be done to increase access for low- and moderate-income borrowers.”

“In the new proposed revisions, HUD has adopted a key recommendation from NCRC and other consumer groups, and tied loan-level certifications into FHA’s quality control framework by adding a pre-endorsement review section to the application. The pre-endorsement certification requires that lenders review each application to ensure that there are no errors that would make the loan ineligible for FHA insurance. This should help provide some additional clarity to lenders that small errors that do not affect the insurability of the loan will not lead to federal enforcement action later.”

“But while HUD has adopted some of the recommendations NCRC and others put forth, there is still more that could be done. The agency could provide some opportunity for lenders to cure minor defects in their applications as well as any harm those defects may have caused borrowers, if the defects do not affect the loans’ insurability but could, nonetheless, expose lenders to subsequent enforcement action.”

“The agency’s final rules on their Quality Assurance Framework are of the utmost importance because the FHA program provides the only access to mortgage credit for so many low- and moderate-income families and minority communities that are today finding themselves locked out of the opportunity of homeownership.”

In July, NCRC submitted a public comment letter on the initial HUD proposal.


About NCRC:

NCRC and its grassroots member organizations create opportunities for people to build wealth. We work with community leaders, policymakers and financial institutions to champion fairness in banking, housing and business development.

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