Comment Submitted by Onity Mortgage Corporation

•What are the advantages and/or disadvantages of FHA’s current MPRs? 1.Advantage is for First time homebuyers to use FHA as they are not experienced in what to look for to identify possible issues. IE lead based paint in a home prior to 1978 that is chipping/peeling is not a cosmetic issue but a health and safety issue. 2.Disadvantage is for buyers looking to purchase condo’s limiting options for homebuyers in a competitive market and seller reluctance to accept a contract offer from an otherwise qualified and motivated buyer •How could FHA streamline and/or simplify its MPR policies? 1. Align where possible with FNMA/Freddie Mac keeping in mind to keep the safe, sound & secure portion in the guidelines to protect 1st time homebuyers/borrowers. 2. It would help if you retire or streamline the ones that duplicate local health/code authority or assume dated housing like, prescriptive well/septic distance and water-quality testing already governed locally, and parts of the outbuilding/appurtenance scope that add appraiser burden without reducing risk to the primary dwelling. Reserve FHA's overlay for occupant-safety and collateral conditions that hold regardless of jurisdiction. •Are there important factors FHA should consider when modernizing MPR policies? 1. Policies should take into consideration new technology like AI that can read the appraisal but not the photos. Policy should be clear that all issues within photos must also have commentary within the appraisal. 2. FHA Connection property warnings: 4000.1 should list messaging under applicable MPRs. 3. Well/Septic requirements should be able to align with county requirements where available 4. Over-applying pre-close repairs can collapse deals for the first-time and lower-income buyers FHA serves. Pair MPRs with flexible remediation, such as, escrow holdbacks, tighter 203(k) integration and a materiality threshold so cosmetic items don't become required repairs. Well/Septic requirements should be able to align with county requirements where available •Do current FHA MPRs adequately protect borrowers utilizing FHA-insured single family mortgage programs to finance a home? 1. On traditional safety, yes. The gap is what they're silent on. Like radon, and wildfire/flood resilience. Naming these does more for borrowers than retiring most legacy MPRs would. •Are MPRs clearly communicated in FHA policies? 1. Not all. Appraiser & Underwriter guidance need to align and be clear. At times, only a photo is provided showing something not meeting MPR but is not addressed in the appraisal report or made subject to repair/inspection. 2. ADUs were recently updated but could provide a bit more content, especially when a home has 2 kitchens-clarification of what is considered a kitchen in determining if subject has all components of an ADU or just has a 2nd kitchen (which would require similar comps) •Is the FHA-approved appraiser’s scope of work to identify MPR deficiencies aligned with modern appraisal practices? 1. Clarity is needed from appraiser when it comes to local safety/building requirements, if a handrail is required due to local building standards, this should be clear and what height is required to bring subject compliant.