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The current Administration seems to have a soft spot when it comes to those who have violated the rules. In a speech at the current NAACP Conference in Philadelphia, President Obama mentioned that, among other things, employers should not be allowed to ask an applicant if they had been previously convicted of a crime. Also, he said that once they had served their time their right to vote should be restored.
Coincidentally (or maybe not), his Administration also believes that lenders, who had previously violated lending laws and/or FHA rules, should not need to certify, for each new FHA loan they make, that they are not, or have not recently been, subject to certain charges or penalties. They could no longer originate FHA loans if they certified that they violated any rules which resulted in fines or penalties. (Certifications)
Interestingly, just before HUD announced this change to the FHA loan level certification, five very large banks were in the process of agreeing to settle and plead guilty in a criminal antitrust violation suit. With such a plea, under the existing FHA certification rules, these banks would then be barred from any further FHA loan originations. The plot thickens.
Was the change made to entice the plea, get the fines but allow the banks to continue to originate FHA loans? Does it matter that these institutions broke the rules, violated their trust and cost the taxpayers money? Would it hurt the economy, the housing markets or the consumer if these banks were no longer allowed to do FHA lending?
This past weekend my grandson played in a baseball tournament. The tournament has certain rules which all teams must follow. In two of the games, the coaches broke the rules. They had to forfeit those games. Even though they actually won the games, they were disqualified. Was that fair to the players? The kids didn’t do anything wrong. The team broke the rules; the team had to pay the price. Otherwise, why have rules?
It’s simple; break the rules; pay the price. According to the Baretta TV show theme song (Keep Your Eye on the Sparrow), “…don’t do the crime if you can’t do the time…” (Editor’s Note: For those of you born after 1970, Baretta was a TV show on ABC from 1975 to 1978)
Loading ...The best way to avoid this dilemma is to originate quality compliant loans. Loan defects which are not addressed are what cause the problems. Lenders need to have the systems and monitoring tools in place to ensure their loans are being originated and closed in accordance with all specific laws, rules and regulations which govern lending. Otherwise, we have chaos.
Make sure you are playing by the rules and you have nothing to worry about.
