Despite changes by the Federal Housing Administration, bankers remain reluctant to join the program for fear of legal liability. But that could change if it revamps servicing processes, experts say.
The government has used the law to bring fraud claims against Federal Housing Administration lenders, but the new steps respond to criticism that minor offenders were also getting punished.
The Federal Housing Administration updated its lender certification proposal originally issued this past May, as it looks to ease industry concerns on False Claims Act enforcement.
The industry welcomed a proposed overhaul of how the government identifies False Claims Act violations, but some say it remains to be seen if the changes are enough to satisfy companies that had bolted.
The administration’s recent report on fintech innovation discussed ways to adopt electronic promissory notes — or eNotes — and automated appraisals in federal mortgage programs.
Banks have not yet finished with the wave of lawsuits stemming from the financial crisis. There are ways they can better ward off those threats next time around.
HUD Secretary Ben Carson told lawmakers that overly rigid False Claims Act enforcement had forced lenders to suffer financially for what were just minor errors, but that lenders' fears of being sued were dissipating.
HUD Secretary Ben Carson has spent much of his first year trying to convince lenders they wouldn't be harshly penalized if FHA-guaranteed loans went bad. But he still has a ways to go.
Trump officials have made clear their intent to reexamine how Federal Housing Administration lenders are cited under the False Claims Act, but whether that means lenders can rest easier is an open question.
