As we wrote last week, the housing market is still woefully overpriced, with supply nowhere near meeting demand, and Venture Capitalists pricing out potential primary home buyers. And yet, there are signs that there may be shifts in the near future, with an uptick in interest rates potentially chasing some of the Silicon Valley and Wall Street money out of the market. Check out last week’s blog if this doesn’t already sound familiar.
Anyway, last week we examined this likely decrease in home value and surge in home purchases from a consumer reporting perspective. Today, we are going to look at it from lending institutions’ perspective.
Lending institutions underwriting mortgages must comply with the many (many, many, many) regulations mandated by the Fair Housing Administration (FHA). A New Deal reform on the heels of the great depression and stock market crash, the FHA backs mortgages, meaning lending institutions can offer mortgages to primary home buyers without worrying if these loans will go into default.
Documenting Compliance with the Federal Housing Administration
In order to benefit from the FHA’s backing, lending institutions must remain in compliance with the regulations it mandates.
These regulations include, for example, a prohibition against sharing space with a real estate agent. A federally-backed mortgage lender and a real estate agent in the same office space is just too big a conflict of interest for the government to allow, with the potential for collusion and exploitation far too high.
Other regulations are a bit more surface level, literally. For example, signage outline fair housing practices must be displayed in common areas, visible to all employees.
These are just two examples of the many (many, many, many) regulations outlined in by the FHA, and violations of any of these mandates can result in punishments ranging from warnings to fines all the way to forfeiture of FHA lender status.
TrendSource FHA Lender Inspections
TrendSource offers FHA Lender Inspections to help lending institutions manage their compliance efforts with these regulations.
These Inspections are particularly useful for lending institutions with branches across geographic distances--it is often difficult to manage compliance with so many far flung locations. However, with TrendSource FHA Lender Inspections, lending institutions can document compliance at each and every branch, and monitor these efforts in one dedicated dashboard.
As the housing market shifts and supply catches up with demand, there are going to be a whole bunch of home buyers finally able to enter the market. These homebuyers will need loans from FHA-backed lenders, and lenders should get their compliance ducks in a row before the surge.
