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Since FHA mortgages are all over the news these days, I am seeing a daily increase in the number of solicitations from lenders and questions from non-FHA approved mortgage brokers about the issue of referral fees being paid to non-HUD approved mortgage brokers. Some of the confusion on the part of mortgage brokers comes from the fact that this practice is allowed on FHA insured reverse mortgages.

However, to avoid unnecessary charges to cover referral fees for a broker who isn’t helping to process their loan, consumers should double check whether the loan officer they are using for their FHA loan application is really an FHA approved lender.

You can look them up on HUD’s FHA website.

As you can see from the article below, HUD is ready to begin cracking down on these violations.

National Mortgage News – Washington News

Unsanctioned Brokers Charging High FHA Fees?Department of Housing and Urban Development officials are finding that non-FHA-approved mortgage brokers are charging “exorbitant” fees on Federal Housing Administration loans in possible violation of HUD rules. “We are seeing exorbitant fees,” HUD officer Mark Ross told a Mortgage Bankers Association conference, adding that HUD officials are reviewing the matter. Mr. Ross also reported that some FHA direct-endorsement lenders are soliciting nonapproved broker business with misleading advertisements implying that the broker can take the application or close the loan. “That is not allowed,” he said. In addition, HUD has seen a “flurry” of applications for direct lending branches that are supposed to be used as call centers or Internet portals to solicit and take mortgage applications directly from borrowers. But some FHA direct-endorsement lenders are using the direct lending branches to solicit loans from nonapproved brokers throughout country. “That wasn’t the intent,” Mr. Ross said.

More Down Payment Assistance Confusion!


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Filed under: FHA Updates • HUD Regulations • How FHA Works

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