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klifffy
Cherry Bomb


Joined: 03 Aug 2007
Posts: 185

FHA changes requirements
PostPosted: Fri Sep 18, 2009 6:33 pm Reply with quoteBack to top

Looks like requirements for lenders will be increased, but correspondents (mortgage brokers) wil no longer be independently approved by FHA. Here is the link:

http://www.hud.gov/news/releas.....N=39504719
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Randall
Batman


Joined: 19 Oct 2007
Posts: 720
Location: Orange County, California

Re: FHA changes requirements
PostPosted: Fri Sep 18, 2009 6:40 pm Reply with quoteBack to top

Well... lets just post that section!

Quote:
Increase Net-Worth Requirements for Mortgagees

The FHA plans to propose to increase the net worth requirement for approved mortgagees to meet industry standards. The requirement is currently at $250,000 and has not been increased since 1993. HUD is proposing an initial increase of approximately $1,000,000 that would be in place within one year of the enactment of this rule. To maintain consistency with industry standards, HUD may propose that the net worth requirements be increased further in future years to a level comparable to those required by GSEs and other market institutions. These changes will help to ensure that FHA lenders are sufficiently capitalized to meet potential needs, thereby permitting HUD to mitigate losses and decrease risks to the FHA insurance fund.

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klifffy
Cherry Bomb


Joined: 03 Aug 2007
Posts: 185

Re: FHA changes requirements
PostPosted: Fri Sep 18, 2009 6:47 pm Reply with quoteBack to top

Here is the good news for brokers that have up til now, been unable to meet net worth requirements for FHA:

"Lenders seeking approval to originate, underwrite, or service an FHA loan must meet the eligibility criteria for a supervised or non-supervised mortgagee. Mortgagees with this approval status must assume liability for all the loans they originate and/or underwrite. Loan Correspondents (mortgage brokers) will continue to be able to originate FHA-insured loans through their relationships with approved mortgagees; however they will no longer receive independent FHA approval for origination eligibility. These policy changes will require the FHA approved mortgagee to assume responsibility and liability for the FHA insured loan underwritten and closed by the approved mortgagee. These changes align FHA with the GSEs and will potentially increase the number of loan correspondents (mortgage brokers) who are eligible to originate FHA-insured loans while providing for more effective oversight of loan correspondents through the FHA approved mortgagees"

Lenders will be the ones approving brokers. Who knows what requirements lenders will put on brokers.
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itiswhatitis
Dyn-o-mite!


Joined: 19 Jul 2008
Posts: 312
Location: Raleigh, NC

Re: FHA changes requirements
PostPosted: Fri Sep 18, 2009 8:26 pm Reply with quoteBack to top

klifffy wrote:
Here is the good news for brokers that have up til now, been unable to meet net worth requirements for FHA:

"Lenders seeking approval to originate, underwrite, or service an FHA loan must meet the eligibility criteria for a supervised or non-supervised mortgagee. Mortgagees with this approval status must assume liability for all the loans they originate and/or underwrite. Loan Correspondents (mortgage brokers) will continue to be able to originate FHA-insured loans through their relationships with approved mortgagees; however they will no longer receive independent FHA approval for origination eligibility. These policy changes will require the FHA approved mortgagee to assume responsibility and liability for the FHA insured loan underwritten and closed by the approved mortgagee. These changes align FHA with the GSEs and will potentially increase the number of loan correspondents (mortgage brokers) who are eligible to originate FHA-insured loans while providing for more effective oversight of loan correspondents through the FHA approved mortgagees"

Lenders will be the ones approving brokers. Who knows what requirements lenders will put on brokers.


They will only do business with Correspondents who have a good track record of doing business the right way and you can bet there will be a very short leash.....

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Snets
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Joined: 12 Nov 2008
Posts: 875
Location: Palm Beach County

Re: FHA changes requirements
PostPosted: Sat Sep 19, 2009 12:11 am Reply with quoteBack to top

what kind of leash do we have now? - everything is right by the book and even tougher - the only thing we have is the appraisal and that is been taken away. I can't imagine these conduits are going to just let any broker do FHA though. watch for the back end ratio to get tightened up though - it won't be a complete surprise if 36 becomes a hard ceiling - yep the pool is getting shallower and shallower
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louis9999
Dud?


Joined: 19 Sep 2009
Posts: 3
Location: Schaumburg, IL

All brokers can do FHA?
PostPosted: Sat Sep 19, 2009 1:40 am Reply with quoteBack to top

Nope! Lots of people have misread that. It will take an act of congress to make that happen. And lets be honest, the new fha appraisal rules are 1 more indication that they want to get rid of brokers.

They throw that it there to make the mortgagee letters not seem so bad. Notice they were issued at 5pm on a Friday.

Notice how they want to increase net worth and make sure everyone has audited financials but at the same time all brokers can do FHA? Not going to happen.

Finally, notice where it talks about all brokers doing FHA they state they will be included in a bill (law) not via mortgagee letter. This is a huge difference. It only there to make us feel better about the rest.

In conclusion, we're all F@#$%#!
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KBB
Cherry Bomb


Joined: 16 Sep 2008
Posts: 163
Location: Illinois

Re: FHA changes requirements
PostPosted: Sat Sep 19, 2009 5:14 am Reply with quoteBack to top

Snets wrote:
what kind of leash do we have now? - everything is right by the book and even tougher - the only thing we have is the appraisal and that is been taken away. I can't imagine these conduits are going to just let any broker do FHA though. watch for the back end ratio to get tightened up though - it won't be a complete surprise if 36 becomes a hard ceiling - yep the pool is getting shallower and shallower


Oh, boo hoo - we have to do things by the book. There will be those who will try and be hero to show (illude) they are being proactive and those who will still cry things are just too tough. What a sad industry this has become simply because of greed and a lack of ethics.

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louis9999
Dud?


Joined: 19 Sep 2009
Posts: 3
Location: Schaumburg, IL

Boo Hoo? Really?
PostPosted: Sat Sep 19, 2009 5:37 am Reply with quoteBack to top

There is too much complaining going on but it's not baseless. Even before the run up in housing, you could get someone an FHA loan with little to no down payment that had a few credit problems.

Not anymore. Housing prices have fallen so far so fast, there's no refi market except streamlines. New rules, those are going to be mostly gone.

From subprime to portfolio lender to conventional and FHA and now just FHA. And a score based FHA?

Now a guy on the job for 10 years with a 20% DTI and a 580 credit score because he doesn't use credit cards (a good thing in my book) can't get a loan?

Well, that just sucks not for the industry but the economy as a whole. But the industry is sad but not for too many complainers. It's sad because little has been done to solve the problems facing not just the housing industry but the economy as a whole.

Whether i sound like a complainer or not, I still say were all F@#$%$!
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itiswhatitis
Dyn-o-mite!


Joined: 19 Jul 2008
Posts: 312
Location: Raleigh, NC

Re: FHA changes requirements
PostPosted: Sat Sep 19, 2009 11:45 am Reply with quoteBack to top

KBB wrote:
Snets wrote:
what kind of leash do we have now? - everything is right by the book and even tougher - the only thing we have is the appraisal and that is been taken away. I can't imagine these conduits are going to just let any broker do FHA though. watch for the back end ratio to get tightened up though - it won't be a complete surprise if 36 becomes a hard ceiling - yep the pool is getting shallower and shallower


Oh, boo hoo - we have to do things by the book. There will be those who will try and be hero to show (illude) they are being proactive and those who will still cry things are just too tough. What a sad industry this has become simply because of greed and a lack of ethics.


And that's exactly my point. If you can show you're strong financially and you have alway done things the right way there will be plenty of FHA business for you to do. Lenders will seek you out to do business with them.

If you've been a shop that doesn't play fair and you're thinly capitalized with questionable financials I'm sorry but you're done.

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itiswhatitis
Dyn-o-mite!


Joined: 19 Jul 2008
Posts: 312
Location: Raleigh, NC

Re: Boo Hoo? Really?
PostPosted: Sat Sep 19, 2009 11:50 am Reply with quoteBack to top

louis9999 wrote:
There is too much complaining going on but it's not baseless. Even before the run up in housing, you could get someone an FHA loan with little to no down payment that had a few credit problems.

Not anymore. Housing prices have fallen so far so fast, there's no refi market except streamlines. New rules, those are going to be mostly gone.

From subprime to portfolio lender to conventional and FHA and now just FHA. And a score based FHA?

Now a guy on the job for 10 years with a 20% DTI and a 580 credit score because he doesn't use credit cards (a good thing in my book) can't get a loan?

Well, that just sucks not for the industry but the economy as a whole. But the industry is sad but not for too many complainers. It's sad because little has been done to solve the problems facing not just the housing industry but the economy as a whole.

Whether i sound like a complainer or not, I still say were all F@#$%$!


If you're complaining that you can't do FHA Seller Assisted DPA anymore and 580 credit scores than IMHO it is baseless. The industry is changing and I think for the good. Will we over do it? Probably because that's what we always do but expecting folks to save money to put skin in the game and have good credit is not unreasonable.

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