?: Can anyone explain to me how not requiring brokers/loan correspondents to be approved was a move done by HUD to “strengthen risk management?
Other than the possible cost benefit of being able to layoff a small number of people HUD is exposing the insurance fund to more risk on a massive scale by making this switch. The end result of loosening the requirements of who can originate is only going to make guidelines tighter, upfront and monthly premiums higher, total origination volume will decrease and the fund will be heavily taxed by having to payout on the higher level of delinquent loans.
Are lenders going to require brokers to have $63k net worth? pay LO’s w-2 for all deals FHA & conventional? submit annual audited financials? have 10% of their files audited by an outside 3rd party QC company?
Talk about a terrible decision. Notice how this is happening right as HUD raises upfront and monthly premiums.
The only thing this will do is show a huge spike in revenue for the department for 1-2 years. Then Shaun Donovan will be able to put on his resume that he single handedly boosted the revenue by x%, he’ll get promoted to a higher political office for his great work as housing secretary, then when the bad loans start to become problematic from all the brokers who had no vested interest in originating good loans he will be in another department and not care that he left the program in shambles…didn’t we just go through this at Fannie/Freddie??? or am I just having mortgage industry Deja vu?
I can’t believe that after what the mortgage industry just went through anyone at HUD could think that making the process of earning the right to originate HUD insured loans significantly easier could be a good idea…amazing…
Here is another good article on the topic:
Here is a newsletter from our QC company, I think she makes some valid points, unfortunately I don’t think HUD is listening…