NAMB condemns practice of circumventing FHA loan processMortgagePress.comFHA mortgage approval process
The National Association of Mortgage Brokers has condemned the
practice of soliciting unapproved Mortgage Brokers to offer Federal
Housing Administration (FHA) loans, thus circumventing the FHA
program's approval process for originators.
"Circumventing the FHA approval process would allow unscreened
participants to enter the program," said NAMB President George
Hanzimanolis. "NAMB stands behind licensing, criminal background
checks, professional education and other reasonable measures that
evaluate participants in the FHA program while keeping access to
FHA loans available to consumers who need them."
This type of third-party origination of FHA loans typically
involves an FHA-approved lender paying the unqualified Mortgage
Broker a fee outside the closing process to bring the FHA loans to
them for processing.
"This loophole needs to be closed as part of FHA reform," said
Hanzimanolis. "NAMB has been a vocal advocate for modernizing the
FHA loan program, and we will continue to seek sensible changes
that benefit consumers."
For example, FHA's annual audit and net-worth requirements for
Mortgage Brokers are often time-consuming and cost-prohibitive.
These barriers often discourage or prevent many mortgage brokers
from participating in the program. NAMB supports reforming the FHA
program, so that more mortgage brokers can participate, thus
expanding consumer choice.
Specifically, NAMB recommends replacing current audit and
net-worth requirements with an annual FHA-required surety bond.
When coupled with existing state-licensing requirements, a surety
bond would maintain accountability, while removing obstacles that
discourage Mortgage Brokers from participating in the FHA loan
program.
For more information, visit www.namb.org.
