Mortgage Compliance Magazine
9 minute read | June.01.2016
With sighs of relief, the vast majority of Federal Housing Administration (FHA) mortgage insurance program participants completed the fiscal year 2015 annual recertification process. The process requires attesting to 10 broad and somewhat ambiguous statements regarding the mortgagee’s compliance with FHA approval and program requirements, or explaining to FHA’s Lender Approval and Recertification Division (the Division) why such certifications cannot be made.
Unfortunately, certain mortgagees’ relief may be short-lived, as this year, the Division appears to have scrutinized mortgagees that identified “unable to certify” events for the first time in this annual process, but had not reported them as Notices of Material Events (NME) during the calendar year. In some cases, the Division has referred mortgagees to the Mortgagee Review Board (MRB) for failure to file an NME in accordance with FHA requirements, although the MRB may not have issued Notices of Violation yet.
Unfortunately, these mortgagees may have hit an unintentional regulatory speed bump caused by inconsistent language resulting from the various changes made by HUD, including the updated definition of “Unresolved Finding” that became effective in September 2015. Although it may not be possible to cure past shortcomings, mortgagees subject to MRB referrals can consider whether arguments may be available that events they did not report were not actually subject to a reporting obligation. Furthermore, all mortgagees can assess their compliance efforts with the NME requirement to reduce their risks going forward. Nevertheless, compliance challenges will remain to the extent it is unclear whether an event is reportable or a mortgagee’s ability to report the event is restricted by other regulators’ confidential supervisory information (CSI) protections.
FHA NOTIFICATION REQUIREMENTS
There are three types of notifications that mortgagees may be required to submit to FHA:
Originally published in Mortgage Compliance Magazine; reprinted with permission.