FHA targets flipping rule repeal and AVM reforms

"When we're talking about how can we help with housing supply, a lot of it starts with eliminating things that actively had harmed the ability to develop and build housing supply, Jones said. Overall, Jones stated that the FHA is generally on track with last year's endorsement levels. On the affordability side, he said the FHA has another round of rescissions coming to address the cost structure of originations, specifically under a recent executive order from President Donald Trump."

"The same goal was behind recent prohibitions for non-residents participating in the FHA program a move that follows a fivefold increase in demand from these borrowers during the Biden administration, he added. Another recent change occurred a few weeks ago when the FHA abandoned the International Energy Conservation Code, which would have added between $20,000 and $30,000 in construction costs per home, Jones said."

"Topics under review include appraisal standards, wet signature requirements, e-signatures and post-closing quality control (QC) evaluations. According to Jones, the COVID-19 pandemic brought an urgent need to overhaul the agency's loss-mitigation program, creating a band-aid problem that was never sunset: an increased use of rolling 90-day partial claims. The FHA's December Mutual Mortgage Insurance report showed that 41% of new partial claims were given to borrowers who had already received three or more partial claims."

"In total, 36,000 borrowers have been in and out of serious delinquency, which exacerbates housing supply problems and servicing costs, he added. In October, the FHA implemented a rule stating that borrowers get one more opportunity for a home retention option. After that, they must be evaluated and prove they are capable of making the revised payments through a trial payment plan to qualify for another option."

Recent FHA changes aim to boost housing supply by removing factors that hinder development and building. Prohibitions on non-residents participating in the FHA program followed a fivefold increase in demand from those borrowers during the Biden administration. The FHA also abandoned the International Energy Conservation Code, which would have added $20,000 to $30,000 in construction costs per home. The FHA is generally on track with last year’s endorsement levels. Affordability efforts include rescissions to address origination cost structure under a recent executive order from President Donald Trump, with topics under review including appraisal standards, wet signatures, e-signatures, and post-closing quality control evaluations. Loss-mitigation reforms respond to COVID-19 by reducing rolling 90-day partial claims and serious delinquency, while retention options now require trial payment plan proof after an additional opportunity.

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