WASHINGTON--Aligning the Federal Housing Administration’s home loan program with government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac’s conventional financing standards would improve the program’s effectiveness and appeal. America’s Credit Unions joined other organizations to send specific recommendations to Department of Housing and Urban Development Secretary Scott Turner last week.
A March Executive Order provides credit unions and other community financial institutions with relief related to mortgage laws, rules, and regulations to increase access. The letter outlines several recommendations to help the Department of Housing and Urban Development meet the order’s goals of improving the availability and affordability of mortgage credit.
Most importantly, ACU said, the organizations urge FHA to adopt the GSEs’ property condition standards as a replacement for the FHA Minimum Property Requirements.
“The GSE’s strong consumer protection standards are associated with the most widely used financing programs in the market,” the letter reads. “This change alone, which would still clearly protect FHA borrowers from purchasing substandard housing, would have a substantial impact in reducing the friction that can discourage or disrupt access to the FHA home loan program.”
Other key changes recommended include:
- Updates to Handbook guidance for the Direct Endorsement (DE) Underwriter Program to separate the credit underwriting from the appraisal underwriting experience requirements
- Split the requirement for one individual to have both three years of experience in credit and appraisal underwriting, by permitting an individual underwriter to qualify for the program by having either credit- or property-related underwriting experience
- Align its appraisal quality control policies, particularly related to field reviews and desk reviews, with the GSEs, which have replaced the mandatory field review with a desk review baseline