Why Getting the FHA's Loan Servicing Rules 'Right' Matters

In recent years, servicing U.S. Federal Housing Administration-insured loans has become risky business. The U.S. Department of Housing and Urban Development has heightened its monitoring and enforcement, with servicers experiencing increased Quality Assurance Division (QAD) reviews, HUD Office of Inspector General inquiries, Mortgagee Review Board (MRB) actions and indemnification demands. Additionally, False Claims Act and Financial Institutions Reform, Recovery and Enforcement Act of 1989-based claims have amplified the potential consequences of noncompliance. Indeed, during fiscal year 2014 alone, the U.S. Department of Justice boasted a record $5.69 billion in settlements and judgments from civil cases involving the FCA. These developments have made it particularly important to get the rules “right,” but as nearly all FHA servicers know, that is not an easy feat.

Originally published in Law360. Reprinted with permission.