FHA ends field review requirement for certain mortgages | ABA Banking Journal
The Federal Housing Administration will no longer require lenders to obtain appraisal field reviews for a selection of FHA-approved mortgages, instead making the reviews optional, according toa mortgagee. . .
The Federal Housing Administration will no longer require lenders to obtain appraisal field reviews for a selection of FHA-approved mortgages, instead making the reviews optional, according toa mortgagee letterpublished today. Previously, lenders had to obtain physical field reviews for at least 10% of quality-control reviewed mortgages, with the mortgages selected at random. In the letter, FHA said the requirement “resulted in significant costs for mortgagees, which often outweighed the limited risk mitigation benefits considering the frequent use of third-party tools and appraisal desk reviews. ”“By making field reviews optional, FHA is removing a potential barrier to mortgagee participation in FHA programs, as well as an expense that may be passed indirectly to consumers,” the agency said. It added that the change also complies with President Trump’srecent executive orderon promoting access to mortgage credit. The American Bankers Association and other associations advocated for ending the requirement ina recent letterto the U. S. Department of Housing and Urban Development, which houses the FHA. They said the policy has become outdated, noting that Fannie Mae and Freddie Mac had replaced their mandatory field reviews with a desk review baseline. “The desk review process for quality control is not only significantly less costly but also reduces the variability and inconsistency often associated with the field review process,” the associations said.