In an effort to strengthen lending programs under the Federal Housing Administration, officials announced this week with the release of the Obama Administration’s 2015 fiscal year budget plan that a new, proposed administrative fee will apply to all FHA lenders.
The agency is working to improve quality assurance among its lender partners, Department of Housing and Urban Development executives said in presenting the proposal earlier this week.
“The FY 2015 Budget] roposes authority for FHA to collect an administrative fee, which will help FHA further its Quality Assurance efforts by expanding its capacity to more effectively monitor loans and also transform its business processes,” HUD wrote in its presentation of the budget.
“The new QA framework is designed to increase lender confidence across the spectrum of borrowers,” said HUD Secretary Shaun Donovan in a call with reporters following the budget release. “FHA will accept an administrative fee to commit to these QAs in place in a way that will enable lenders to eliminate some of their credit overlays.”
While FHA has not yet specified how the fee will be implemented or the amount that the fee is likely to take, a HUD official confirmed to RMD that the agency is planning for the fee to apply to both forward and reverse lenders.
The total of all fees will be capped at $30 million, FHA commissioner Carol Galante said during the press call, nothing the possibility that the fee will apply based on lender volume.
“It will be forthcoming as we have further conversations in coming months,” she said.
The budget also creates other insurance fund-strengthening initiatives including the Homeowners Armed with Knowledge program, a housing counseling pilot that will increase access to credit to first-time homebuyers and to embed counseling for troubled homeowners.
Written by Elizabeth Ecker