The Mortgage Bankers Association sent a letter to the Department of Housing and Urban Development in earlier this month, pushing to avoid unnecessary regulatory burden with regard to new legislation. Responding to HUD’s request for comments on “Improving Regulation and Regulatory Review,” MBA notes several time-consuming and costly regulations, which it asks for HUD to revise and adapt.
One such suggestion is to eliminate the face-to-face requirement for servicers to attempt to reach borrowers who are delinquent, if the mortgagee has an office within 200 miles of the borrower’s home. Communication alternatives should allow for effective counseling that is not necessarily face-to-face, MBA writes.
The MBA also encourages HUD to revise its policy on loss of 60 days interest on every FHA claim. Payment of debenture interest starts on the date of default, MBA states, which is 60 days after the last paid installment, presenting an extremely costly program feature. Instead, MBA suggests that the payment of debenture interest coincide with the advancement of interest to the investor.
A third point MBA addressed in its letter is HUD’s list of allowable reimbursable expenses, which servicers can receive up to 67%. Servicers can receive a greater amount of reimbursable expenses based on a tier ranking system, but MBA urges HUD to allow 100% of reimbursement regardless of tier ranking.
MBA also calls for revision of HUD’s debenture interest process, suggesting that FHA should apply a per diem penalty for each day a deadlines is missed, or should adopt a penalty of 30 days lost interest for each cycle missed.
Finally, MBA recommends that FHA re-evaluates its lender recertification process and develops an annual certification method. The letter stresses that FHA should not amend its requirements while lenders are in mid-compliance, and that lenders must be given ample lead time before new recertification rules take effect.
Written by Elizabeth Ecker