Mike Vitali reports that it looks as though FHA is asking for two things for Christmas.
1) For lenders to make loans to borrowers with lower credit scores, and
2) for fewer defects on the loans they make. FHA reviewed 6645 loans in the first quarter and found only 16% were acceptable, while 48% were considered unacceptable having material defects, and the remaining 36% considered as deficient, meaning they had defects that could potentially be corrected.
MV indicates that he feels that this further evidences the need for Lenders having to do more quality loans with fewer defects, as is also required by Fannie Mae and Freddie Mac. If not, Lenders may find their FHA loans uninsured or see more repurchase requests on conventional loans. All the more reason for Lenders to perform their loan reviews prior to a loan closing to detect errors early which can be corrected before the loan closes, making for much cleaner, quicker delivery. Why wait until it’s too late?
An ounce of review is worth a pound of correction.