Real Estate Blog - New Law Allows More Brokers To Close FHA Loans

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New Law Allows More Brokers To Close FHA Loans

Per conversations with members of Dole's staff - understand the following is accurate.

H.R. 1852 cleared House of Representatives mid-September. This legislation, loosely referred to as FHA Reform, is included in Dodd's Bill S.2338. Now that both the House and the Senate have FHA legislation, senior members of both the House and the Senate are able to take their respective versions into conference committee to work out the differences between the bills. Members in both the House and the Senate will want to keep certain provisions from H.R. 1852 in the final bill they will send to the President. It is important to remember that the language in H.R. 1852 that allows brokers to post a surety bond in lieu of audited financials has not been met with opposition in either chamber and was in fact passed by both the full House of Representatives (348-72) and the Senate Banking Committee (20-1).

We've been told that the surety bond provision is not a point of contention between the House and the Senate and that it should be included in the final bill that becomes law.

WIIFM? (or why do I care??) Because every subprime mortgage broker who has NO FHA experience will now be able to close FHA loans by the end of March!!! The newer, softer, FHA could be a huge pie in the face for anyone who sends those deals to a lender who thinks you can close an FHA loan just like any other deal!!!

Posted by Eleanor Thorne, Cary Mortgage Loans on 12/19/2007 12:51 PM

Comments (8)

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8 Comments on New Law Allows More Brokers To Close FHA Loans

Changes are in the air... this outta be fun!

Ed Nailor - Charlotte Mortgage Loans

12/19/2007 05:39 PM

by Charlotte Home Loans - Your Charlotte Mortgage Lender (The Ed Nailor Mortgage Team)

Eleanor,

From your mouth to God's ears! I hope this survives.

Mike in Tucson

12/20/2007 07:37 AM

by Mike Jones (Tucson Mortgage Company, LLC)

I have been concerned with that lowering of the bar. Loan officers who, frankly, are not qualified to be submitting FHA loans, have been clogging lender's pipelines for months with their sub par submissions. I want FHA to be available to more borrowers, but I personally am not convinced that doing so requires letting the same group of people who destroyed subprime get their paws into the program.

12/22/2007 09:47 PM

by Carl Pruitt - FHA Mortgage Specialist (fhaloanadvice.com)

I'm not sure what you mean by this comment? How do you mean?

"The newer, softer, FHA could be a huge pie in the face for anyone who sends those deals to a lender who thinks you can close an FHA loan just like any other deal!!!"

This legislation just boggles my brain, seems like it's creating problems even in areas that are positive.

12/23/2007 04:29 AM

by Kate Bourland; Redding Mortgage Home Equity Specialist (North State Home Loan & Mortgage)

Are you sure that this is going to be included in the final version of the bill? I am just little confused because I read them both and I could not find that particular item about broker's bond, maybe I was looking at the wrong place... I have heard some confilicting comments about broker's bond. I think NAMB comment on their website was said that brojker bond was not included in the final version?? And what is the amopunt of the bond, 50k, or 100K?

I have had significance and succesfull experience originating FHA loans and pretty good working knowledge about it...however, since I have started my own shop, due to high net worth requirement and costly audits, I was unable to get approved or originate FHA loans since...If this goes in final bill, I would look forward to it, really..

Happy Holidays!

12/24/2007 02:01 PM

by First BH Mortgage

Carl,

Are we sure that this is going to be in the final version..?? what is the bond amount ?

12/24/2007 02:03 PM

by First BH Mortgage

We're not sure about any of it yet, since the conference committee has not met to reconcile the House and Senate versions of the bill, and until they do there won't be a "final" version. But as stated in the original post here there doesn't seem to be any opposition to the bonding requirement - the Senate just left it out. I think it is one of the items from the House bill which will survive.

12/24/2007 02:19 PM

by Carl Pruitt - FHA Mortgage Specialist (fhaloanadvice.com)

This is a great reason to be in touch with your represenatives and let them know that this provision is importatnt to all of us!!

12/26/2007 10:03 AM

by Eleanor Thorne, Cary Mortgage Loans (Meridian Residential)

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