FHA

HUD and Justice Department Sign Interagency Memorandum on Enforcement of False Claims Act

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On October 28, the U.S. Department of Housing and Urban Development (HUD) and U.S. Department of Justice (DOJ) issued a Memorandum of Understanding (MOU) between the two agencies that provides prudential guidance on the appropriate use of the False Claims Act (FCA) for violations by Federal Housing Administration (FHA) lenders. The MOU aims to bring greater clarity to regulatory expectations within the FHA program and ease banks’ worries about facing future penalties for mortgage-lending errors. HUD expects that FHA requirements will be enforced primarily through HUD’s administrative proceedings, but the MOU specifically addresses how HUD and the DOJ will consult with each other regarding the use of the FCA in connection with defects on mortgage loans insured by the FHA. In addition to the MOU, the FHA is simplifying certain certifications that lenders make in connection with the FHA program to better track statutory requirements and address materiality and culpability considerations. HUD Release. DOJ Release.

HUD Announces Agency Efforts to Reduce Risk From Cash-Out Refinance Lending

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On August 1, the U.S. Department of Housing and Urban Development (HUD) announced joint policy actions designed to reduce risk associated with cash-out refinance lending. The changes preserve homeowners’ ability to convert home equity to cash via a government-sponsored mortgage but also improves the risk profile of HUD’s housing finance programs. To address these concerns, the Federal Housing Administration (FHA) will lower its maximum loan-to-value (LTV) requirements for cash-out refinance transactions from 85 percent to 80 percent. This policy change will be effective for loans with case numbers assigned on or after September 1, 2019 and aligns with the maximum cash-out LTV allowed by the Government Sponsored Enterprises (GSEs). Release.

FHA Offers Incentives for Property Owners Who Invest in Opportunity Zones

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On May 9, the Federal Housing Administration (FHA) announced a package of incentives to encourage multifamily property owners to invest in thousands of neighborhoods located in Opportunity Zones across the nation. FHA is introducing reduced application fees paid by property owners applying for certain multifamily mortgage insurance programs for the development or rehabilitation of apartment units located, or proposed to be located, in Opportunity Zones. In addition, FHA is designating teams of senior underwriters to review these applications to ensure the most attentive and timely processing. Press Release. Housing Notice.

FHA Expands Pilot Program to Accelerate Financing of Low-Income Housing Tax Credit Projects

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On February 21, U.S. Housing and Urban Development (HUD) Secretary Ben Carson announced a significant expansion of a Federal Housing Administration (FHA) pilot program that streamlines FHA mortgage insurance applications for affordable housing developments that have equity from the sale of Low-Income Housing Tax Credit (LIHTC) Program, the nation’s primary source of affordable housing production. Release.

The Federal Housing Administration Announces New Loan Limits for 2016

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On December 9, 2015, the Federal Housing Administration (“FHA”) announced its schedule of loan limits for the 2016 calendar year. The new schedule, effective January 1, 2016, raises loan limits in 188 counties and are a result of changes in housing prices in the respective areas. These loan limits are effective for case numbers assigned on or after January 1, 2016, and will remain in effect until 2017. FHA’s Loan Limits Page. Press Release.

FHA Changes to Loss Mitigation Home Retention Options

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On November 20, the FHA announced changes to its loss mitigation program which will allow more distressed borrowers to qualify for FHA loss mitigation interventions and to get greater assistance.  Included among the changes are: (i) streamlining the FHA’s Loss Mitigation Home Retention Option to a 3-tier incentive structure; (ii) redefining “Special Forbearance”; (iii) eliminating some requirements which limited lenders’ ability to provide borrowers with assistance; and (iv) expanding HAMP. FHFA Release.

FHA Price Cuts to the Streamline Refinance Program

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On March 6, the FHA announced price cuts to the Streamline Refinance Program.  Beginning June 11, the FHA will lower its Upfront Mortgage Insurance Premium to 0.01% and reduce its annual premium to 0.55% for certain FHA borrowers.  To qualify, borrowers must be current on their existing FHA-insured mortgages which were endorsed on or before May 31, 2009.  FHA Release.

Administration Support for Homeowners

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On March 6, President Obama announced two steps to support homeowners: (i) the nation’s five largest servicers have agreed to provide relief for servicemembers and veterans, including those wrongfully foreclosed upon or denied a lower interest rate on their mortgages and (ii) a reduction of fees for FHA borrowers looking to refinance under the Streamline Refinance Program.  Fact Sheet.