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Overview
On September 17, 2010, FHA Commissioner
David H. Stevens issued a letter in which he discussed various new
risk management requirements involving FHA's multifamily housing
programs, initially introduced on July 7, 2010.
The changes are meant to update underwriting policies, increase
lender and underwriter quality, and align loan application, review
and approval standards.
We highlighted these changes in our
Mortgage Compliance Update (FHA:
New Oversight of Multifamily Risk: 7/7/10).
In this most recent letter, Commissioner Stevens indicates that
other additional Multifamily initiatives are underway.
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Highlights
Heightened Standards for Lender and
Underwriter Qualifications
- All new and existing multifamily
lenders and underwriters will undergo an additional screening
process to insure that they are qualified and experienced before
receiving approval to participate in specialty insurance program. A
separate approval will be required to offer the agency's more
complex insurance programs, such as those for new construction,
substantial rehabilitation and Low Income Housing Tax Credits.
Time Frame: Qualifications
will become effective later in the Fall, through the issuance of a
mortgagee letter.
Update to the Multifamily
Accelerated Processing (MAP) Underwriting Guide
- Will be updated and revised to incorporate all Mortgagee
Letters, Housing Notices, and administrative guidance that have
been issued since it was first published, along with new chapters
on affordable housing underwriting and environmental requirements
and expanded chapters on market studies, commercial income and
mortgage credit analysis.
Time Frame: New MAP Guide is
expected in January 2011.
Standardization of Underwriter's
Narrative and
Application File Contents
- To assure critical analysis of the risks of proposed
transactions by MAP underwriters, a standard underwriter's
narrative will be used for applications submitted under all
insurance programs. and also requiring a standard table of contents
be used to organize application submission.
Time Frame: Lenders will be
required to use the standardized forms on all new applications by
January 2011.
Loan
Committee
- A new loan committee approval process will align Hub and
Program Center commitment authority and practice to ensure
consistency in underwriting throughout the regional offices, as
well as to provide a platform to share best practices. Loan
committees at the Hub and National levels will provide oversight
for most transactions in the multifamily insurance program,
depending on loan size and a project's number of units.
Time Frame: The notice
implementing the Hub and National Loan Committees was issued in
early August and became effective this month. The National Loan
Committee has begun operating and has a regularly scheduled weekly
meeting. The HUB Loan Committees will begin operating later this
month.
Multifamily Credit
Watch
- An objective, point-based system, based on one in use by Single
Family, will track multifamily lender performance, material
violations of FHA underwriting standards and the rate of loan
defaults and claims paid. Under the new Multifamily Credit watch
monitoring system, each lender's underwriting and loan performance
will be compared to that of all other lenders in the MAP program.
Based on that review, lenders may be placed on probation, suspended
or could have their approval terminated.
Time Frame: The Multifamily
Credit Watch system will be published as a proposed Rule for a
30-day comment period later this month. After comments are
received, a final Rule will be issued by the end of this
year.
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FHA Commissioner David H. Stevens, Letter
September 17, 2010
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