The Federal Housing Administration (FHA) is moving to
reduce risks to its single-family insurance fund through new regulations
proposed today.
The changes, announced by FHA Commissioner David
Stevens, include increasing the net worth requirements of FHA-approved lenders from
the current level of $250,000 to a minimum of $1 million within the first year
after the rules become effective and to at least $2.5 million within three
years of rule implementation. The
changes would ensure that FHA lenders are sufficiently capitalized to meet
potential needs so that FHA can mitigate losses from and risks to the insurance
fund.
Under a second proposed change, lenders seeking
approval to originate, underwrite, or service FHA loans must meet the
eligibility criteria for a supervised or non-supervised mortgagee, assuming
liability for all the loans they originate and/or underwrite. While mortgage brokers will still be able to
originate FHA-insured loans through relationships with approved mortgagees they
will no longer receive independent approval for origination eligibility. This will be the responsibility of the FHA
approved lender through which the loan is written. This change will bring FHA into line with
regulations already in place for writing Fannie Mae and Freddie Mac
mortgages. It is hoped that this
modification will allow more mortgage brokers to write FHA loans while enabling
FHA to provide greater effective oversight of those agents.
In announcing the proposed changes Commissioner Stevens said, "With
FHA's crucial role in today's housing market, it is critically important that
we are able to manage risk and to ensure that our reserves are adequate to
cover future losses. We are taking a number of aggressive steps to ensure that
we are able to continue to support the housing market in the short-term and
provide access to home ownership to the underserved in the long term, while
minimizing the risk to the American taxpayer."
FHA is soliciting comment for 30 days on its proposals and the comments
received will be considered in the development of a final rule.