The Federal Housing Administration (FHA) issued new guidance (Notice H-2011-35) on Dec. 29 to its lenders designed to expedite loan processing and deal with its backlog of applications.
The new procedures take effect immediately and respond to NAA/NMHC’s calls for FHA to delegate more loan processing authority to Hub committees and field offices and to create more transparency for borrowers. Among other things, the guidance says:
• Existing HUD-insured loans seeking refinancing will no longer require central loan committee approval.
• The threshold for requiring new loans to go through the central loan committee has been increased from $15 million or more than 150 units to $25 million or more than 250 units.
• Loans for properties with 75 to 250 units, or between $5 million and $25 million, will require Hub Committee approval. Loans below those levels can be approved by field offices.
• Loans for affordable properties with rent restrictions have separate procedures that require less involvement by Hub and the central loan committee to expedite them.
At NAA/NMHC’s urging, the notice also creates new reports to better inform borrowers of the status of their applications. However, NAA/NMHC believe the new reports remain confusing and will seek clarification on their use.
NAA/NMHC have asked the U.S. Department of Housing and Urban Development (HUD) to remove the unit thresholds, noting that property size has little bearing on credit risk. Although HUD was receptive, it is unclear if it will make NAA/NMHC’s requested modifications.