Carson Calls for Relaxed Federal Oversight for FHA Lending

Ben Carson used a speech at the Mortgage Bankers Association’s annual conference in Denver to express interest in cutting government regulations on Federal Housing Administration-backed lending.

The Housing and Urban Development secretary told the MBA that his department plans to make life easier for FHA lenders in order to expand loan availability to lower-income borrowers, according to a Bloomberg report.

“Innocent errors should not create chaos and fear and make people less likely to get involved in the first place,” Carson said in his remarks, Bloomberg reported.

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The Department of Justice and the FHA are actively seeking ways to amend the current regulatory landscape to avoid punishing companies for simple oversights, as opposed to outright fraudulent activities, Carson reportedly told the MBA audience.

The DOJ oversees claims of fraud under the False Claims Act, which has resulted in some serious penalties against reverse mortgage and other lenders: Back in 2015, the DOJ reached a $29.6 million settlement with Walter Investment Management Corp. (NYSE: WAC) over false interest claims regarding its Reverse Mortgage Solutions, Inc. subsidiary.

Wells Fargo (NYSE: WFC) paid out $1.2 billion in settlement cash regarding separate residential FHA mortgage issues the following year, with the DOJ accusing the lending giant of multiple fraudulent activities.

Carson’s words come amid a general anti-regulatory push from the Trump administration, which has made slashing federal oversight of the financial industry a key part of its economic policy. The National Reverse Mortgage Lenders Association has sought multiple types of relief in response to a call from HUD for suggestions from the industry; the department was in turn inspired by executive orders from President Trump that intend to roll back regulations.

The HUD secretary also expressed interest in a variety of Home Equity Conversion Mortgage-related reforms during a Senate hearing earlier in the month, including removing reverse mortgages from the Mutual Mortgage Fund and extending HECM access to co-op owners.

Written by Alex Spanko

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    • Raymond,

      While you are close, you get no cigar. The Housing and Economic Recovery Act of 2008, also known as HERA and Public Law 110-289, made that change at Section 2122(b). President Bush enacted HERA by signature on 7/30/2008.

      HUD has balked at implementing the provision because under law co-ops are personal property, not real property. Of course the reason is expanded from there but goes beyond the purpose of this comment.

  • There is a big difference between government regulations that are government-designed for government control of free enterprise, That’s the bad kind.

    And, regulations that actually protect the responsible, retail consumer (“the little guy”). That’s the good kind.

    There doesn’t seem to be any signs that Dr Carson and HUD differentiate and actually understand the difference.

    There are also regulations that are designed to protect the Irresponsible and grossly unqualified (see sub-prime loan scam).

    The problem is in identifying and understanding the existing status quo in order to know what to change it to. I’m not sure the current HUD is “up on” all this.

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