Columbus Ohio real estate

FHA announces implementation of lender net worth requirements

 

FHA changes that may affect you as a home buyer.  This is from a lender in TN / GA  not someone in Central Ohio.  Thanks to Richard Smith for allowing his post to be Re-Blogged.

 

 

FHA Reform-Strengthening Risk Management through Responsible FHA-Approved Lenders

FHA has issued its new mortgagee letter announcing its implementation of the Final Rule for lender net worth requirements. It should not have much immediate impact on consumers, but it is significant nonetheless.

Perhaps more impact to consumers - FHA will no longer approve loan correspondents - mortgage brokers. This responsibility will shift entirely to HUD approved lenders.

Until December 31, 2010, correspondents that already have FHA approval can continue to originate through the rest of the year. After that, HUD approved lenders will have full responsibility for compliance and performance of sponsored correspondents/brokers.

This new lender/sponsored correspondent broker relationship will change the broker industry. My thoughts are that it will limit consumer choice. I expect that brokers will be less able to select lenders for their niche strengths - such as pricing, property, credit standards.

Lenders will likely have volume standards to justify maintaining the sponsorship. Brokers who send a particular lender the occasional loan because of a special niche may no longer have that luxury. Already some lenders are hiring third party management companies to handle their correspondent sponsorships.

This seemed to me to be a bad idea when it was in the comment period. It still seems like a bad idea to me now. I do not see how it will be more efficient for each lender to duplicate the oversight of sponsored correspondents. But that is just me. Maybe it will enable more brokers to originate FHA loans, brokers who were not previously able to do so.

I would love to read comments from others about how they expect this to impact lenders, brokers, and consumers.

  

Richard Smith
NMLS 184479

Cell:
423-280-0345
Toll Free: 888-474-9920
Office: 423-899-6898

American Acceptance Mortgage, Inc
NMLS 132505, TN/GA Licensee

Email: rsmith@aamonline.com

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Information is deemed to be accurate but should be verified to your satisfaction.  Information provided herein is supplied by several sources and is subject to change without notice.  Opinions expressed are solely those of Maureen McCabe.

 


 

Comment balloon 1 commentMaureen McCabe • June 15 2010 06:52PM

Comments

Maureen, this is very good information, and I am glad that you re-posted it.  My very best lender is a mortgage broker so I am concerned to read this news as she does lots of FHA loans.

Posted by Sharon & Bruce Walter, West Lafayette homes for sale (Keller Williams Realty Lafayette, IN) about 9 years ago

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