FHA Mortgage Guide

Beginning October 29th, HUD will allow community housing counselors to be paid by, ta da, lenders.

According to new regulations published in the Federal Register, HUD says that “funding for housing counseling is a major concern among participating agencies. In a change in this final rule, HUD is clarifying that it will allow for participating agencies to accept funding from lenders, as long as the relationship does not create a conflict of interest and that the relationship is disclosed to the client.”

If you’re an absolutist, or merely awake, you realize there are no conditions under which money from a lender to a housing counselor does not create a conflict of interest. If you have two lenders and one pays more for counseling than the other do you really believe they will be recommended the same number of times?

Imagine if dentists were paid by a drill bit company or doctors were paid by drug companies, what do you think would happen?

It’s easy to understand that housing counselors need funding, but it’s equally clear that the concept of independent counsel for borrowers is simply not credible when a lender is paying the tab.

Check out these FHA resources for more information

This entry was posted on Monday, October 1st, 2007 at 12:26 pm and is filed under FHA, FHASecure. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.