Bank of America closed their wholesale mortgage lending leaving many FHA lenders and brokers pondering their next step. BofA eliminated mortgage broker access to their FHA loan programs including FHA mortgages. Remember that Bank of America Home Loans abandoned wholesale lending back in 2007, but resumed following their purchase of Countrywide Home Loans. Once again the lending giant has quit wholesale mortgage business.
Other banks have made a similar decision, citing the greater likelihood of broker-originated loans to end up in default. Studies indicate that home loans originated by a bank employee have less of a chance of defaulting based on several other published lender reviews. According to BofA president Doug Jones, “Bank of America remains committed to purchasing and financing FHA home loans from Correspondent Lending companies, including those approved to originate loans from mortgage lenders.” FHA loan rates continue to fall to record levels, so most people in the mortgage industry still consider FHA mortgage lending a significant opportunity looking ahead to loan business in 2011 and 2012.
Filed under FHA news, Published Articles · Tagged: FHA lenders, FHA Secure, Hope for Homeowners, Reverse Mortgages
Community banks, thrift institutions, and credit unions seeking to serve mortgage customers with loans insured by the Federal Housing Administration (FHA) can qualify for FHA loan approval with minimal capital investment, according to author and mortgage expert Anna DeSimone. Operating as Supervised Correspondents, local lenders can offer FHA mortgage loans, including options such as Reverse Mortgages, FHA Secure, and Hope for Homeowners. Supervised correspondents maintain control of all aspects of the client relationship without the necessity of hiring FHA-certified personnel.
“FHA mortgage lending is no longer just a product option. For community-based institutions, it’s an imperative for helping to sustain our neighborhoods,” stated DeSimone, founder of Bankers Advisory and author of twelve books and numerous articles on the mortgage business. DeSimone, who also wrote the three-volume “Responsible Lending Series” on FHA mortgage lending, pointed out that banks seeking to become direct FHA mortgage lenders must invest in substantial training and have a Direct Endorsement underwriter on staff. But as she emphasized in a seminar attended by 80 community banks last March at the Boston Federal Reserve, the supervised correspondent option enables the banks to enter the market quickly and with minimal expense.
FHA mortgage lenders can look to specialists like Bankers Advisory for assistance with FHA licensing and initial steps which include structuring relationships for outsourced underwriting and private-label servicing. “Community bankers have done well in expanding residential mortgage lending to include affordable housing, soft seconds and mortgages sold to secondary market investors. But recent legislation, including the Housing and Economic Recovery Act and portions of the so-called ‘bailout bill’ are tied to FHA loans. Most small lenders are not familiar with the back-end obligations of FHA home lending, such as quality control compliance and reporting requirements,” explained DeSimone.
Bankers Advisory’s “Audit and Assessment Guide” has 80 pages of step-by-step instructions on submitting reports through the FHA’s mandatory online reporting system. The company also helps lenders adhere to HUD’s strict directives on quality control through QC plans and services that cover post-funding quality control, document re-verification, trend reports, risk monitoring and compliance.
About Bankers Advisory ( www.bankersadvisory.com ) Founded in 1986, Bankers Advisory has helped mortgage lenders throughout the United States achieve high standards of credit quality and employee proficiency through a full range of audit and consulting services, customized policy manuals, training, and workflow development. Bankers Advisory has an unparalleled reputation for excellence in the mortgage industry and among national and state banking agencies. The firm’s underwriting experts have audited more than 50,000 FHA mortgage files. Thousands of employees have been trained on Banker’s Advisory’s educational materials.
There have been many critics of the Hope for Homeowners FHA loan program because many believed that if mortgage lenders did not participate that it would be a moot point. Last week HUD updated the FHA lender list. As of right now, it is available through an excel spreadsheet on the HUD website.
What is the hope for homeowner program? If you haven’t heard the details of this loan product, try and visit the FHA Home Loan Services site that explains the Hope for Homeowners program or the FHA issued Factsheet. The H4H FHA loan program attempts to aid troubled homeowners by refinancing their current mortgages into cheaper FHA insured mortgages. One of the characteristics of these FHA loans would be that they can be no larger than 90 percent of the property’s new appraised value; this will help lower costs and help avoid the dreaded route of foreclosure.
Why is this so important? The program itself is quite helpful since it addresses the problems of our housing crisis by refinancing these troubled mortgages. More importantly, FHA programs like these encourage individuals to simply take action. This could be as simple as calling your lending company or shopping with a few mortgage companies to get a variety of mortgage options. This FHA loan program will help specific homeowners, as well as set a hopeful trend among homeowners and lenders alike. With this recently updated list, we are beginning to to see more and more participation and response from FHA mortgage lenders that are making great strides to help homeowners. The FHA has since introduced numerous programs, but the Hope for Homeowners program stands out because it specifically details the discounting of mortgages to address the recent decline in home prices.
While the list has been updated on an excel spreadsheet, you can expect further updates as more lenders participate. To check for updates, remember to visit the FHA site here. If your mortgage lender is still not listed, remember to still call your lender either way. As mentioned, home loan lenders are responding more favorably to loan modifications and working out options with their borrowers due to the recent onslaught of foreclosures. At the moment, HUD expects this list to be updated on Fridays – so if your lender still hasn’t appeared, don’t worry as it may take awhile since the program was only initiated this month. In addition, HUD advises you to contact the Housing Counseling Agency if you are having trouble communicating with your current lender and/or subordinate lien holders.