To originate FHA loans, there is a fee of $1,000 + $500 per branch. You need to maintain a net worth of at least $63,000 (+ $25k per branch) and that needs to be proven through audited financials each year - an additional expense.

OR, just place your loans through the multitudes of lenders sending account reps to your office each day. Oh, and don’t worry about fully processing the loan, we’ll handle that for you too!

And of course the mortgage caps need to be mentioned - in states like NY, NJ, CA, most loans exceeded the caps, so the choice wasn’t even there.

HUD simply failed to recognize that their market was not necessarily the end user - they should have focused on the needs of mortgage brokers who would have loved to provide FHA mortgages to their clients but there were just too many hoops to jump through.

Sub Prime lenders recognized this and took advantage. Its called Capitalism.

Now, HUD has an opportunity to change their ways. They could easily embrace mortgage brokers - let mortgage brokers be the “man on the street”. Mortgage brokers are sales organizations… they do not close loans. If HUD would focus their energy on the lenders and hold them responsible for their loans, they would see lenders raising their standards for what is accepted as a brokered FHA loan.

Ron Borg