By: Krista Cooley
Last Thursday, HUD issued Mortgagee Letter 2013-41 to clarify its self-reporting requirements for FHA-approved lenders. The Mortgagee Letter updates HUD’s prior guidance regarding an FHA-approved lender’s obligation to self-report instances of fraud, material misrepresentations, and material findings identified in connection with the origination, underwriting, or servicing of FHA-insured loans. New guidance set forth in this Mortgagee Letter includes direction on the timeframes to which lenders must adhere in reporting findings to senior management and to HUD, as well as clarification regarding what constitutes a “mitigated” finding in connection with the self-reporting requirements.
Mortgagee Letter 2013-41 also includes a definition of what constitutes a “material finding,” as well as a non-exhaustive list of examples of material findings, all of which reference origination and underwriting activities. While the Mortgagee Letter states that serious, material servicing violations also must be reported, the examples in the Mortgagee Letter do not provide FHA-approved servicers with guidance as to what HUD views as a serious, material finding of FHA servicing requirements
The Mortgagee Letter is effective immediately. We will follow up with a more detailed client alert on the guidance set forth in this most recent Mortgagee Letter.