And might I state that you are spot on in your statement that, “Higher capital requirements should generally be welcomed — but don’t forget that higher capital requirements also limit lender competition by raising barriers to entry. That’s not a bad side effect if you’re an established lender.”

My fear as a mini-eagle FHA approved lender is not the higher capital requirments, it is that Big Banks will have the ultimate authority to grant access to FHA loan products. I believe we are witnessing the end of competition in the market place and the Big Banks ultimate goal of dominating the mortgage industry will soon be realized.

Homeowners benifit from a competition as it keeps closing costs down and a hedge on interest rates. With the mortgage bankers and brokers seat removed from the table, a mortgage lending monopoly controlled by the Big Three will only fuel the current housing crisis and hurt homeowners.