Is HUD’s “Final Rule” Bad Business For Either Lenders or Mortgage Brokers?
Since the U.S. Department of Housing and Urban Development (HUD) issued the “Final Rule” of new regulations pertaining to the approval of mortgage lenders by the Federal Housing Administration (FHA) in early April, there has been a plenty of speculation on how these changes will impact lenders and mortgage brokers. These are important changes to the approval process of FHA lending. HUD has “advised that it is the mortgage lender with the greatest control over the mortgage loan that should be subject to FHA’s rigorous lender approval and oversight processes, and bear the greatest degree of responsibility and liability for the mortgage loan obtained by the mortgage borrower and insured by FHA.” The question I ask myself is why did this take so long? It seems so basic that lenders with wholesale operations should have always been fully accountable for the loans they purchase from mortgage brokers. I always thought that was just sound business and risk management. But looking back we know
