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Ben Carson pledges to ease burdens on lenders

U.S. Housing and Urban Development (HUD) Secretary Ben Carson strongly hinted Monday that the Trump administration would take a softer touch on mortgage lenders that follow the rules.

In a speech at the Mortgage Bankers Association national convention in Denver, Carson said that HUD continues to review its enforcement policies, so that mortgage companies — whom he called ‘the dream makers” — are not held to impossibly high standards.

“Lenders have rightly pointed out that absolute perfection in the lending process cannot be achieved, and that borrowers bear the cost of compliance through higher mortgage rates,” Carson said.


Carson was alluding to the aggressive approach taken by the federal government during the Obama years of using the False Claims Act to prosecute companies that originated loans insured by the Federal Housing Administration (FHA). Some of these loans were later found to be defective. Some large banks have pulled back significantly from FHA lending. The industry has complained for years that the FHA guidelines over what constitutes a material error in a loan — and one that can lead to penalties — are not clear.

“We have heard these concerns,” Carson said, adding that HUD has consulted with the justice department, and “is committed to resolving these issues.”

“We want every good lender who makes responsible loans and services them well to feel confident that they can participate fully in HUD’s program, serving borrowers and enabling housing to continue to spur our economy,” Carson said.

Carson said that HUD will continue to aggressively prosecute lenders who don’t follow the rules. He specifically mentioned as disturbing the practice known as “churning,” a form of which has lately surfaced in the aggressive sales tactics employed by some lenders to get veterans and military personnel to refinance Veterans Affairs-backed loans.

“There should be no lack of clarity about one point,” Carson said. “There will continue to be no room at FHA or Ginnie Mae for bad actors.”

Elsewhere in his speech, Carson touted the administration’s commitment to tax reform, housing finance reform and slashing red tape.

“We want our government to work efficiently,” Carson said. “It is for this reason that the president has directed federal agencies to guard against burdening American families and their businesses with unnecessary and expensive regulations,” Carson said.

Carson stayed away entirely from the hot-button issue of the FHA insurance fees. Democrats and some trade groups have been putting pressure on the agency to reinstate a planned cut to the insurance fees. In the waning days of the Obama administration, HUD announced it was reducing the premium, a planned reduction that was immediately suspended by Trump officials.

Carson also spoke in almost utopian terms of HUD’s goal of ending homelessness. Keeping to his conservative ideology, however, Carson said that the government’s role was to create a pathway for people to help themselves. He mentioned his own hardscrabble childhood, where his mother worked three jobs and forced her children to pick themselves up.

“I have often spoke of that great day that will come when no family in our nation will want for housing,” Carson said. “We can get there.”


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