Clearer FHA guidance on loan defects may help lenders avoid problems but they do not provide legal protection against costly government false-claim lawsuits, according to mortgage industry stakeholders. Long-anticipated rules issued recently by the FHA explain how the agency intends to categorize loan defects identified during an individual loan-level review of endorsed single-family mortgages. The loan-defect assessment methodology or “defect taxonomy” was first unveiled in September 2014 as part of the FHA’s Blueprint for Access, which outlined steps the agency is taking to expand lending to underserved and first-time homebuyers. Combined with the updated loan-certification language used by lenders to warrant compliance with FHA rules and the new Single Family Policy Handbook, FHA plans to use the taxonomy to create a stronger quality assurance program. With better quality ...