FHA attempts to change rules to spur lending
Looks to loosen mortgage lending
The Federal Housing Administration is attempting to limit one of the most powerful tools federal attorneys have to punish banks for making mistakes in mortgage lending, an article in The Wall Street Journal said.
Because banks must certify that FHA-backed mortgages they originate have no errors, when mistakes are found the Justice Department has sometimes pursued damages under a Civil War-era law known as the False Claims Act that lets the government recover triple damages.
The article explained that banks started to pull back from originating mortgages since they feel penalties are too harsh relative to the errors made.