The Department of Housing and Urban Development has proposed new rules that it hopes will clarify the current rules that dictate how lenders underwrite mortgages insured by the Federal Housing Administration.
FHA insured loans have allowed borrowers with lower credit scores to make lower down payments – something that isn't possible through most loans backed by conventional mortgage insurance.
Since January 2015, a number of large banks including Wells Fargo and J.P. Morgan either retreated from writing FHA loans or faced federal lawsuits alleging mistakes in their FHA loan underwriting and documentation, according to legal documents and media accounts.
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