As proposed in a November 30, 2009, proposed rule (74 FR 62521), HUD is seeking to eliminate FHA approval for loan correspondents. Because this rulemaking is still in process and a final rule has not yet been issued, FHA is extending the deadline for the submission of audited financial statements for loan correspondents seeking renewal of their FHA lender approval for 2010. For loan correspondents with a fiscal year end of December 31, and that would ordinarily be required to renew their FHA approval by March 31, 2010, HUD is providing these lenders with an additional 30 days in which to submit their audited financial statements. These loan correspondents must continue to comply with existing requirements for the submission of their Annual Certifications and renewal fees, but will be given until April 30, 2010, to submit audited financial statements. Again, the deadline for the submission of the Annual Certification and renewal fee has not been changed. Loan correspondents that do not complete their renewal in accordance with the deadlines as specified above will no longer be FHA-approved as of the effective date of the final rule that follows the November 30, 2009, proposed rule.
The comment period for HUD’s rule banning the use of seller assisted down payment programs is still underway but in the meantime, as I noted in my previous post today, House Financial Services Committee Chairman Barney Fran, D-Mass., recently told The Washington Post (registration required) that the House has agreed to accept Senate provisions that ban seller funded downpayment assistance on FHA loans and impose a 12-month moratorium on the charging of risk-based premiums by the FHA. The White House has also dropped opposition to the bill, so it is now on the fast track to passage.
On Thursday June 19, 2008 HUD issued a press release indicating that they were sending out letters to 675,000 “at risk” homeowners. As has been the case with most of HUD’s efforts for troubled borrowers, the gist of the letter leads this writer to believe that HUD is really going after borrowers with good credit. Syndicated author Peter Miller agrees with this viewpoint in his Friday post on FHA Mortgage Guide. As he notes, many of these borrowers might well have qualified for an FHA loan in the first place.
On Oct. 30, 2007, I published a post entitled “FHA Mortgage Co-brokering: Watch Out!” in which I warned of potential violations of FHA’s policy regarding payments to non-approved mortgage brokers. HUD made an announcement that day outlining their policy, but it was not issued in the form of an official Mortgagee Letter and it did not clearly identify that the policy applied to any fee paid by the borrower and not just payments made through yield spread premium.
This may sound harsh, but divorce is not a good excuse for bad credit.
Considering the number of credit explanation letters I see in FHA loan submissions which prominently promote divorce as the explanation for borrowers’ credit foul-ups, it appears clear to me that many loan officers are not aware of this fact. As a result, many loan submission files end up unnecessarily in the turn-down stack.
For ages, your borrower’s nontraditional credit has been acceptable to use to qualify for FHA loans. In the past, though, HUD wasn’t very specific on exactly what they expected to see when alternative credit was used. Were letters from creditors acceptable proof or did it need to be added to a nontraditional credit report? What types of accounts are acceptable?
Many new loan officers are streaming into FHA loan origination. Their FHA loans are being turned down left and right by frustrated underwriters who can’t believe such junk was put on their desk. It was not their intention to submit junk. The problem is that they are accustomed to the conventional mortgage submission process, not the FHA manual submission process.
The advice I’m about to give goes against the grain in the mortgage business where everyone likes to advertise that they offer 1200 different loan programs for borrowers with all types of credit. I’m going to give it anyway. Loan officers today cannot survive without good FHA training.
The very best way to make your mortgage marketing successful is to concentrate it on a very tightly defined niche and position yourself as the expert in that niche. Borrowers aren’t attracted to those one size fits all ads and you are throwing away your money.
Here are three niches that an FHA mortgage specialist can use to close more loans in less time with more profit and, most importantly, happier customers that are anxious to refer their friends and relatives.
1. First Time Home Buyers.
This is the most obvious FHA niche market. After all, this was the reason the FHA program was created in the first place. In spite of what you hear in the news, a housing downturn presents the best time for smart and well advised first time home buyers to enter the market.
The key to marketing to first time buyers is to understand that they need a lot of information and guidance before they trust. Study their needs in today’s market. Those needs are a little different than they were during the boom times.
Create a free report that shows how FHA mortgages can help meet those needs and put that home buyer in a position to profit when real estate values start rising again – as they always do. Create a series of follow-up letters and reports that you can send out over time. Get their email addresses and set up an automatic series of emails that can be sent out to them over a long period of time. Educate them and they will trust you.
Many new loan officers are streaming into FHA loan origination. Their FHA loans are being turned down left and right by frustrated underwriters who can’t believe such junk was put on their desk. It was not their intention to submit junk. The problem is that they are accustomed to the conventional mortgage submission process, not the FHA manual submission process.
