The Federal Housing Administration is waiving its policy requiring mortgagees to provide borrowers with a longstanding notice that lays out FHA loan rights and responsibilities.
The waiver for use of the “Important notice to homebuyers” disclosure is in line with the federal government’s broader deregulatory agenda, and ends the use of “a redundant and outdated form,” according to an FHA information bulletin.
“The change could lead to faster processing times and a less cumbersome experience for the borrower,” the FHA wrote.
Mortgage companies have been responsible for distributing the form at the start of the loan process, obtaining the borrower’s signature and maintaining it in the case binder. Topics covered in the disclosure include fraud, credit scores, prepayment and safety standards.
The waiver applies only to loans the FHA has not yet endorsed and other regulatory and statutory disclosure requirements still stand.
The FHA has not had a confirmed commissioner since Julia Gordon left at the end of the Biden administration, but the Senate could vote soon on nominee Frank Cassidy, who has been filling the role on an acting basis.
Cassidy currently serves as principal deputy assistant secretary at the Department of Housing and Urban Development and the Mortgage Bankers Association this week pushed for both his confirmation and that of Joe Gormley, the nominee for Ginnie Mae president.
FHA insures mortgages at the loan level. Ginnie guarantees securitizations of FHA loans and others that various government agencies back. Like Cassidy, Gormley currently is serving in the role he has been nominated for on an acting basis.
Collectively the two agencies are responsible for a large portion of the U.S. mortgage market that the government directly backs, and the MBA President Bob Broeksmit has stressed the importance of officially putting two leaders with industry experience in charge of them.
“Frank Cassidy’s deep expertise in real estate finance and commitment to improving housing affordability make him exceptionally qualified to lead FHA. Joe Gormley’s leadership and extensive experience in housing policy and mortgage capital markets will be invaluable,” Broeksmit said in a press statement,
The Senate Committee on Banking, Housing and Urban Affairs voted 14-10 to advance Cassidy and Gormley by 13-11. The votes were largely along partisan lines.
In confirmation hearings, Cassidy faced some concern from Democrats about the downsides of some recent efficiency measures, such as how shrinking FHA timelines for distressed home sales affected chances for families to bid on them and compete with private investors in Atlanta.
He also faced questions about HUD cuts during the government shutdown, the impact on efficiency measures on housing counseling and whether he would consider making community land trusts eligible for FHA financing.
Gormley has faced questions from Democrats about a reported removal of pending information related to an initiative that would create a securitization vehicle for buyout loans from reverse mortgage securitizations.
A request for information HUD published earlier this year on reverse mortgages FHA insures and the related securitizations Ginnie guarantees will result in a more thoughtful approach to those markets, Gormley said in response.
