December 22, 2020

HUD: FHA Announces Updated Single Family Loan-Level Certification Form

Streamlined form capstones efforts to provide certainty for FHA Single Family program participants

The Federal Housing Administration (FHA) today announced the completion of its revised and streamlined loan-level certification form required from lenders when originating a single family mortgage intended for FHA insurance endorsement. The updated form eliminates unnecessarily dense language while remaining consistent with pertinent statutes and other program requirements. The updated form also continues to safeguard FHA against fraud and misrepresentation by requiring lenders and borrowers to certify to the truthfulness and accuracy of required information.

“As outlined in HUD’s Housing Finance Reform plan, we have taken great steps to provide clarity and certainty needed for qualified lenders to continue participating in FHA’s Single Family insurance program and providing borrowers affordable homeownership opportunities,” said HUD Secretary Ben Carson. “Today’s announcement capstones the work done by HUD, including our Memorandum of Understanding with the Department of Justice on the use of the False Claims Act, and the revisions to our Single Family defect taxonomy and the annual lender certification.”

“We believe the revised loan-level certification strikes the right balance between clarity and accuracy and our ability to take strong enforcement actions against those who willingly harm FHA and the American taxpayer. This certification can and should survive the test of time,” said Assistant Secretary for Housing and Federal Housing Commissioner Dana Wade.

The revised form, officially called the HUD Form 92900-AAddendum to Uniform Residential Loan Application is mandated by FHA and must have signatures from the underwriter and/or other lender representative, as well as the borrower. The revised HUD Form 92900-A may be used by lenders immediately but is required for all FHA single family forward and Home Equity Conversion Mortgages submitted for FHA insurance endorsements with case numbers assigned on and after March 22, 2021.

“The new loan-level certification form is the result of extensive work performed by FHA over the last year to assess the public and industry comments received on proposed drafts. The new certification is cleaner and clearer, which should go a long way toward alleviating the concerns with the previous form expressed by lenders over the years,” said Deputy Assistant Secretary for Single Family Housing Joe Gormley.

The revised loan-level certification is the final piece of FHA’s promised reforms to reduce concerns about significant actions that could be taken against lenders for minor errors in underwriting. In October 2019, FHA announced a Memorandum of Understanding with the U.S. Department of Justice that provided new ground rules for the appropriate application of the False Claims Act, versus other remedies that FHA can pursue to address underwriting defects with individual lenders. FHA also revised its annual certification statements that lenders must submit each year to FHA, which covers certifications related to their organization and business operations. Last fall, FHA launched a revised version of its Single Family Loan Quality Assessment Methodology, known as the “defect taxonomy,” which provides lenders with a detailed assessment of how FHA views the severity of various underwriting errors in the mortgages it insures, and the appropriate remedies that lenders must take to address these errors.

This post was originally published here.