What enforcement activities are employed by FHA when a Mortgagee does not comply with FHA policies and procedures?

The Single Family Housing Handbook 4000.1 provides general information about the processes and procedures normally employed by FHA.
 
FHA’s Office of Single Family Housing is authorized to take the following enforcement actions against Mortgagees that do not comply with FHA requirements:
  • Probation of Direct Endorsement Authority;
  • Withdrawal of Direct Endorsement Authority;
  • Credit Watch Termination;
  • Suspension or Termination of Lender Insurance Authority; and
  • Return to Conditional or Withdrawal of Unconditional DELRAP Authority
FHA’s Office of Single Family Housing also has the authority to pursue loan level actions and sanctions such as indemnification or principal reductions for Material Findings of FHA’s origination, underwriting and servicing requirements. 
 
HUD’s Mortgagee Review Board (MRB) is authorized to impose civil money penalties and take administrative action against any FHA-approved Mortgagee that does not comply with HUD or FHA’s statutory, regulatory, or Handbook requirements, the Real Estate Settlement Procedures Act (RESPA), or the non-discrimination requirements of the Equal Credit Opportunity Act (ECOA), the Fair Housing Act, or Executive Order 11063 on Equal Opportunity in Housing.  The following actions and sanctions may be imposed by the MRB:
  • A letter of reprimand;
  • Probation;
  • Suspension;
  • Withdrawal of FHA approval; and
  • Civil money penalties.
The MRB may also enter into settlement agreements with non-complying Mortgagees.
 
For additional information about FHA’s Enforcement activities see Handbook 4000.1 V.E at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-01816