HUD Secretary Ben Carson Announces New Initiative to Promote FHA Lending
WASHINGTON, D.C. – (RealEstateRama) – U.S. Department of Housing and Urban Development (HUD) Secretary Ben Carson announced today that his agency reached an agreement with the U.S. Department of Justice (DOJ) on the use of the False Claims Act for Federal Housing Administration single family loans.
Center for Responsible Lending President Mike Calhoun made the following statement:
CRL applauds HUD and the DOJ for working together and signing a memorandum of understanding addressing how the agencies will confer on False Claims Act prosecutions. CRL also supports FHA’s efforts to revise the annual lender and loan-level certifications, and institute a Defect Taxonomy, which ties loan defects of varying severity to remedies. Such actions will ensure a more robust and targeted quality control system that will provide more access to affordable mortgage credit to low-to-moderate income borrowers.
The False Claims Act remains a critical tool to root out fraud and bad lender behavior in the FHA program, but trivial loan origination errors should not trigger triple damages and penalties for banks. The announced reforms will improve compliance with FHA’s underwriting rules. We hope and expect that increased clarity about enforcement standards will encourage banks to reenter the FHA market and expand access to FHA-insured mortgage credit.
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