Lenders are generally supportive of the FHA’s recently issued guidance explaining how the agency intends to categorize loan defects found in FHA single-family mortgages. At the same time, some observers find the guidance disappointing because it offers no protection for lenders against costly false claims lawsuits. The loan-defect assessment methodology or “defect taxonomy” was first unveiled in September 2014 as part of the Blueprint for Access that FHA hopes will expand access to credit by underserved consumers and first-time homebuyers. In particular, the new taxonomy will complement the updated loan-certification language used by direct-endorsement lenders to warrant compliance with FHA rules and the new Single Family Policy Handbook to create a stronger quality assurance program, according to Edward Golding, principal deputy assistant secretary for housing. The taxonomy has...