WASHINGTON (9/8/15)--More time is needed to study the impact on mortgage originators and servicers of proposed changes to the Federal Housing Administration (FHA) Single Family Mortgage Insurance program, CUNA told the agency Friday.
The U.S. Department of Housing and Urban Development (HUD) proposed in July to change the maximum time period for filing insurance claims under the FHA program, to curtail interest, and to disallow operating expenses incurred beyond certain established timeframes.
"Our request for additional time stems in large part from our concern that the rule as proposed may result in lenders being unwilling to participate in the FHA program due to the potential of FHA cancellation on a significant percentage of FHA loans.
"We believe this goes against the FHA’s mission of making affordable housing available," writes Andrew Price, senior director of advocacy & counsel, in the CUNA comment letter.
Price underscored CUNA's concern that the HUD proposal does not reflect today’s foreclosure environment. The financial crisis overwhelmed many states with an unprecedented number of foreclosures. States reacted with different approaches to foreclosures--creating a patchwork of laws and rules across the nation.
CUNA acknowledges the difficulty this situation presents to drafting a rule that can accommodate the myriad of foreclosure-related issues: "It is precisely this reason why we believe HUD should use caution in implementing a rule that hinges the drastic penalty of cancellation of insurance on such factors."
CUNA recommends improvements to the rule if HUD decides to forge ahead with its plan.
However, the CUNA comments conclude, "We strongly urge HUD to revisit the draconian tying of the termination of insurance to a mortgagee’s delay. The chilling effect on FHA lending could undo much of the good created by the FHA lending program."