Based on calls I receive there is still a lot of confusion about FHA loan commissions.

Since the recent resurrection of FHA loans there is much misinformation published on who can receive a loan commission.  I am sure you have received emails claiming that FHA approval is not required to originate FHA loans. 

The bare bones truth of the matter is:

• No one can represent the buyer or seller as their real estate agent and receive a commission on an FHA loan.
• In order to receive commissions on FHA loans the loan officer must be a W2 employee of the lender and cannot have any other real estate or mortgage affiliation.

While there is much information to the contrary, HUD has recently published a bulletin that clearly states what is and what ain't:  Mortgagee Letter 2008-17

Excerpt from the Hud Letter:

Other services that are considered counseling in nature (e.g., educating prospective borrowers in the home buying and financing process, advising the borrower about different types of loan products available, and demonstrating how closing costs and monthly payment could vary under each product), may be performed by a non FHA-approved broker so long as the services provided constitute meaningful counseling, and not steering.  Under RESPA Policy Statement 1999-1, when "counseling type" services are performed, HUD also looks at whether,

(1)   counseling gave the borrower the opportunity to consider products from at least three different lenders;  

(2)   the entity performing the counseling would receive the same compensation regardless of which lender's product were ultimately selected; and

(3)   any payment made for the "counseling type" services is reasonably related to the services performed.  In these instances, the fee charged must be paid from the mortgagor's own available assets, must be disclosed on the HUD-1 at closing and a copy of the contract for these services must be included in the loan file submitted for insurance endorsement.

Under no circumstances may a borrower be charged a fee that is not commensurate with the amount normally charged for similar services.  If the payment bears no reasonable relationship to the market value of the services provided, the excess over the market rate may be used as evidence of a compensated referral or unearned fee in violation of section 8(a) or (b) of RESPA and 24 CFR 3500.14 (g).

The best advice I can give is to play by FHA rules.  The consequences for not playing nice are serious.

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