We’re kinda Nerdy at my house, and last night we watched a CSPAN discussion regarding the Future of Mortgage Lending in Washington, DC.  John Courson (President of Mortgage Bankers of America) and the folks from the Center for Responsible Lending were on the panel.

One of the questions to the panel was, “Do we need to change the way we regulate agencies, including FHA?”  Well – this is really not much of a debate, because new regulations from FHA’s new “Risk Manager” are already headed into action later this month.  I’ve included some of the text below, and I toally disagree with the “assumption” I’ve bolded below:

Strengthen and Streamline Lender Approval – Lenders seeking approval to originate underwrite, or service an FHA loan must meet the eligibility criteria for a supervised or non-supervised mortgagee.  FHA-approved Mortgagees must assume liability for all the loans they originate and/or underwrite.  While loan correspondents (mortgage brokers) will continue to be able to originate FHA-insured loans through their relationships with approved mortgagees, they will no longer receive independent approval for origination eligibility. This will require the FHA-approved mortgagee to assume responsibility and liability for the FHA-insured loan underwritten and closed by the approved mortgagee. These changes align FHA with Fannie Mae and Freddie Mac and will potentially increase the number of loan correspondents (mortgage brokers) who are eligible to participate in the origination of FHA-insured loans while providing for more effective oversight of loan correspondents through the FHA approved mortgagees.

Strengthen the Capacity of FHA-Approved Mortgagees– Since 1993, FHA has required approved mortgagees have a net worth of at least $250,000.  To strengthen the financial capacity of FHA counterparties to ensure they can meet their obligations, the proposed rule would require mortgagees maintain a minimum of $1 million in net worth within the first year and at least $2.5 million of net worth within three years of the effective date of the rule.   These changes are consistent with industry standards and will ensure that FHA lenders are sufficiently capitalized to meet potential needs, thereby permitting FHA to mitigate losses and decrease risks to its insurance fund.

Here’s my point… in today’s “Mortgage Brokers are BAD” environment, do you really think Wells Fargo (for instance) is going to continue to “supervise” mortgage brokers who are closing FHA loans?  Ugghh, No.  The number of “reputable” banks that are willing to supervise brokers will continue to SHRINK.

Someone said, “Yeah, it took 1,000 years for the Dinosaurs to become EXTINCT…” but that’s the long, slow march Brokers are on.  Regulation is going to END Mortgage Brokers entirely – and only LARGE, Regional Mortgage Bankers, or LARGE Banks are going to be left!

That’s why Steve and I went to work for Connect With Us on Facebook.  We operate as a Mortgage Banker, and we are Regional – and we can meet the staggering 2.5 MILLION dollar reserve requirements.  Call us, if you are a Mortgage Broker looking for a home! 919-649-5058

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