Comment Submitted by Covius Services

Question 1. What are the advantages and/or disadvantages of MPRs compared with property safety and soundness requirements of other governmental and non-governmental financing programs? The FHA MPRs tend to go beyond other governmental and non-governmental financing programs which creates a more extensive process for a determination of acceptable safety, soundness and security. This can be viewed as an advantage for requiring a higher level of property condition for FHA loans. The FHA MPRs also can have disadvantages in the following areas. Higher repair costs compared to other financing programs. This can result in homes not being offered for FHA financing, or elevated selling prices to offset higher condition requirements and anticipated repairs. Longer financing transaction cycles due to the more extensive inspection and repair process. A lack of lender, buyer, and seller knowledge of the specific MPRs can create a market resistance to FHA financing due to the unknown process, potential costs, and uncertainty of a property’s acceptable level of condition. Question 2. Do the current MPRs adequately protect borrowers utilizing FHA programs to purchase or refinance a home? Do the current MPRs adequately protect FHA's Mutual Mortgage Insurance Fund (MMIF) through reduced collateral risk? The current MPRs do protect borrowers for the property condition at the time of financing. However, the property condition can change significantly throughout the life of the loan. Question 5. Are there important factors FHA should consider generally when modernizing policies to balance the safeguarding function of MPRs relative to any additional burdens that MPRs may impose? Consider only requiring repairs to items that directly affect soundness and safety. Normal wear items will occur throughout the life of the loan and mandating that those items be identified and repaired prior to closing should not provide any additional collateral security for FHA. Question 7. How could FHA streamline and/or simplify MPR policies for Mortgagees and appraisers to better interpret and apply MPR policies consistently? Align with governmental and non-governmental financing programs to create a uniform set of MPRs that could be universally understood by mortgagees, lenders, and appraisers. Question 9. Suggestions for improvement or comments on modernizing FHA's approach to MPRs. Work to standardize MPRs with other residential lender entities. Provide clear communication to lenders, borrowers and appraisers about MPRs, including additional examples and practical guidance to promote consistent interpretation and application of MPR requirements. Promote greater consistency in MPR interpretation to reduce borrower uncertainty, transaction delays, and operational rework while maintaining appropriate borrower and collateral protections. Continue to request stakeholder comments on MPRs.