Several Quality Assurance enhancements are expected to be implemented by both FHA and Fannie Mae in the coming months – can lenders expect to pay more fees to help defray the costs for these improvements?
Fannie Mae has announced that, in mid-December 2014, they will be making several updates to their Quality Assurance System (QAS) to assist lenders in navigating their QAS and improving the reporting capabilities of this system. A “Back” button will be introduced to allow users to return to previous search results, a Quick Start function has been added that will enable users to easily retrieve loan details, a review status date will be added to reflect the most recent review status of a loan, and more.
Two new reports will be made available to users: Loan File Requests Past Due and Bulk Concur. Fannie Mae has also reported that they intend to improve communications with lenders by enhancing their email notifications with the Fannie Mae loan number included on all future notifications. Best of all – the enhancement will be rolled out with no associated additional fees & charges to be assessed to lenders.
HUD/FHA is in the process of revamping its Quality Assurance System and has formally proposed a new “Defect Taxonomy” with the following objectives:
- Communicate a clear policy message
- Encourage lending to FHA targeted populations
- Provide feedback on the effectiveness of their underwriting policies.
FHA has identified nine proposed defect categories and severity levels are now assigned to each defect. Sources & causes of each defect will also be identified as part of their loan review process. The end result will be more transparency in the loan review process. Payment of the costs associated with these enhancements, as well as other systems and risk management improvements being made by HUD/FHA, is a controversial topic however.
A provision contained in Senate Bill 2438 (which has been approved by the Senate Appropriations Committee) would assess an “Administrative Support Fee” to FHA lenders that can be as much as 4 basis points of the original principal balance of mortgages originated by the lender during the previous fiscal year. This is quite alarming to high-volume FHA lenders.
A House-passed version of HUD’s appropriations bill did not give HUD the authority to charge this new fee. We will all have to wait to see the outcome of this Senate bill and what impact it will have on the industry when or if it is passed. Keep in mind that FHA mortgage insurance premiums are already at historically high rates. If this new “Administrative Support Fee” is not authorized – it is not clear what effect it will have on FHA’s plan to implement their revised Defect Taxonomy.