The U.S. Department of Housing & Urban Development (HUD) has issued Mortgagee Letter 2009-53 that eliminates the one percent loan origination fee limit on Federal Housing Administration (FHA) loans, but provides that the FHA will monitor lenders to ensure they are charging "fair and reasonable" fees for all origination services and that it intends to issue future guidance containing fee limits.
The letter also clarifies the manner in which fees and charges for FHA-insured loans must be disclosed on the new Good Faith Estimate (GFE) and HUD-1 Settlement Statement. In particular, the mortgagee letter instructs mortgagees on the proper method for disclosing origination charges (which are no longer capped at one percent of the mortgage amount for standard mortgages) and seller credits.
Additionally, with respect to GFEs, the letter provides that mortgagees must file any GFE provided to the borrower on the right hand side of the insurance endorsement case binder. The new requirements went into effect Jan. 1, 2010.
Click here for a copy of Mortgagee Letter 2009-53.
For more information, visit www.hud.gov.