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<\/figure>\n<\/div>\nEnvisioned to provide rules of the road for mortgage servicers, industry groups and housing advocates say the Federal Housing Administration<\/strong>‘s draft defect taxonomy would instead keep lenders away.<\/p>\n The document spells out<\/a> what remedies the agency may seek if it finds loan-level defects pertaining to servicing. Remedies \u2014 punishment for mistakes, in other words \u2014 could be as mild as producing additional documentation or as severe as life-of-loan indemnification. Other forms of financial remediation could include borrower refunds, principal reduction, account adjustment or remittances paid to FHA.<\/p>\n Industry and housing advocates say the document is unclear, and will not spur the return of depositories that in recent years have abandoned the FHA<\/a> market. Industry groups have asked FHA for more time to provide feedback.<\/p>\n Meg Burns, executive vice president of the Housing Policy Council<\/strong>, who was previously director of the Department of Housing and Urban Development<\/strong>\u2019s office of single family program development, said the document did not rise above a \u201clist of sections of the single-family handbook without any specific requirements.\u201d<\/p>\n \u201cI think [HUD] would like for this to be the kind of document that would serve as a compliance roadmap that would indicate what is important,\u201d said Burns. \u201cUnfortunately, it lacks the detail necessary to serve that purpose.\u201d<\/p>\n A HUD spokesperson said the agency expects and encourages industry feedback<\/a> on the draft defect taxonomy, and it will take that feedback into consideration before moving forward.<\/p>\n \u201cIt is important to note that the draft Servicing Defect Taxonomy that FHA posted on its Drafting Table on October 28 is exactly that \u2013 a draft,\u201d said a HUD spokesperson. \u201cWe do believe that the additional clarity that will be provided through a final servicing defect taxonomy will be beneficial to those doing business with FHA.\u201d<\/p>\n Start an HW+ Membership<\/a><\/span><\/u> now for less than $1 a day.<\/p>\n Your HW+ Membership includes:<\/p>\n Become a member today<\/a><\/p>\n Already a member? log in<\/a><\/u><\/p>\n<\/ul><\/div>\n<\/p><\/div>\n<\/p><\/div>\n<\/p>\n The post Draft defect taxonomy could have \u201cchilling effect” on FHA market<\/a> appeared first on HousingWire<\/a>.<\/p>\n![\"hw](\"https:\/\/www.housingwire.com\/wp-content\/uploads\/2021\/06\/2020_HWLogo.jpeg\")
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