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For assistance with mortgage licensing, contact us at:Direct Phone: (714) 656-3960
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Information herein is for educational purpose only and is not meant to be a complete statement of all state mortgage licensing requirements. Additional State and FHA mortgage licensing requirements may be required. If you need further information, we would encourage you to contact us directly.
FHA Approval May Get Easier
Expanding American Homeownership Act of 2007 has been passed by the House and will most likely be passed by the Senate and signed by the President after a few minor adjustments. This is the biggest change to FHA that has occured since it inception. If the House has it's way, this would actually change the initial purpose of FHA from being an agency formed to help low income households to an angency that helps almost all Americans to be able to own and keep their homes.Increasing FHA Loan Limits
Why am I saying this? FHA has always been geared toward helping low income, poor areas, to be able to afford buying houses. The new bill that is now before the senate proposes to increase the loan limits from $200,000-$350,000 to as high as $700,000 in areas with high median house prices. I personally don't know any low income people that own $700k houses, except for those individuals that lied on their loan applications and "stated" that they made $10,000 per month as a janitor at Wal Mart and actually got the loan. Fortunately, Bush has stated that he will not allow this to happen. He intends to keep FHA's purpose intact. I believe the Senate will do the same. Bush plans on keeping the FHA loan limit at $417,000 or below. We should see very soon.
Elimination of Audited Financials Requirement for Brokers
This is the second largest change to FHA. If this is passed by the House, it would open the door to about 90% of the nations mortgage brokers that were previously restricted from becoming an FHA Approved Broker (Loan Correspondent) due to the cost barrier. Most people don't realize it, but audited financials can cost between $2,000 to $20,000 for the average small broker to obtain. The audited financials required by FHA must be completed by a CPA that has gone through a peer review and the minimum net worth must be $50,000 according to FHA's stringent net worth calculation guidelines. Now, the 90% of brokers that did not have the time, money, and resources to put together audited financials, can put forth a surety bond in lieu of the audited financials. A surety bond is obtained through insurance companies and covers the consumer or third parties in a transaction and is payable by the mortgage company if drawn on by the state to pay a consumer or third party. The new bill preposes a bond between $50,000 and $100,000. Most analysts would agree that something similar to this will be in the amended bill when passed by the Senate.
What will be the affect of this Bill
Whether the FHA loan limit is increased to $700,000 in some areas or $417,000, the bill will change FHA's purpose dramatically. Many people will be looking to FHA as a place to obtain a loan that conventional lenders are not able to provide. This is possible through FHA's upfront mortgage insurance that is able to reduce the risk of higher debt-to-income and loan-to-value ratios. We will also see a huge surge of advertising for FHA when the majority of mortgage brokers are given access to be approved FHA brokers. Unfortunately, the House tends to think that this will be the solution to the current market problems. This is a great start, but I think it will take much more than this to bring an adjustment to all of the lies and deception that occured in the last 5 years in the mortgage industry.
09.22.2007. 20:25
Judy on 10.03.2007. 20:46
I am a one person Mortgage Broker shop. I would love to be FHA approved but can't afford the FHA audit. The CPA in my town does FHA audits but the cost is around $10,000. (that's a friend discount)
Has the House and the Senate approved the FHA reform bill and does it include the elimination of the FHA audit.
Thanks
Judy Philips
Founder on 10.09.2007. 08:20
In regards to your question about the Audited financial requirement, the house has passed that bill and it is in committee in the US Senate. It is expected to pass shortly. There will still be a time frame for HUD to put together new regulations and for the new bill to be effective, but it should be very soon.
Did you say, the surety bond can be obtained through insurance company, meaning an independent broker like me can get an insurance and use that as a surety bond?
What does it look like the final outcome of down payment assistance in reference to companies like Nehimah will come to?
The bill has not yet passed. Surety bonds are available through insurance companies. At this point, down payment assistance is still available for FHA loans. And Judy... $10,000 is a ridiculous fee for audited financials. Shop around - you should be abale to get one for around $3,000. My accountant would be happy to assist you. I help people looking to get FHA approved. It's really not that hard. You do need to be able to show a net worth of $63,000 and 20% of that needs to be liquid. Go to my website if you would like me to help you. And I do not charge for this assistance.
Ron on 03.18.2008. 05:04
May I ask why you ask for a website address if you don't publish it?
Ron on 03.18.2008. 05:05
ok... never mind... maybe I didn't include the http or something.
My company needs some advice as well. What is your contact info?
Thanks,
Justin
Steven Sheasby on 06.09.2008. 11:24
Here's my contact info:
Integrity Mortgage Licensing
Steven Sheasby, President
(714) 656-3960
ssheasby@integritymortgagelicensing.com
PS - The senate never passed the new law allowing for a surety bond so the audited financials is the only way to go. Feel free to contact me if you still need assistance. I have CPAs that are very reasonable in price.
Heather on 07.02.2008. 11:40
I am hearing that there are exceptions within the FHA approval process but I can not get that information through FHA. I am a Sole proprietor and was told that a few companies have been approved as such. Does anyone have any idea if this is true? So many companies like myself are small now (I work alone in an office) how are we supposted to get approved?? I have 18 years of history in the industry and have been licensed for over 8 years.
Any information or suggestions would be greatly appreciated.
Thank you,
Heather Marton
Marton Financial Group
Charcle Narcle on 07.20.2008. 22:21
Change the business to an llc. Add your spouse whom has 3 years experience.
Jackie Harmon on 08.20.2008. 11:36
After 22 years in this business and owning my own company since 1995 it looks like I am being forced to close my doors. I don't have $63,000 in net worth especially after this crisis. Is there anything I can do? I have learned if I go to work for someone I must close my business and turn in my brokerage business license. This just doesn't seem fair. How can it be OK to force people out of work? Has anything changed with the law. I try to keep up but it is so confusing. I get so many referrals and now they all need FHA or FHA 203K. Even a an approved broker cannot due a 203K. How can this be allowed? It sure feels like discrimmination to me.
Brian Dayton on 09.09.2008. 18:15
Jackie, If anyone doesnt think that Big Banks dont have something to do with killing the surety bond requirement in lieu of audited financials then I have some property on mars to sell them.
We were all set to have this bogus audit fnancials killed and then it was taken out of the bill. I have written my senator and congressman. Have you?
I did not renew my membership with NAAB because they dont seem to care about this either. Even though it will put many of their members out of business. But then again look at your local NAMB offices who is on their board? Many lenders. So basicly we have no voice on this issue.
I would encourage everyone that is still in business to write their senator and congressman and tell them how you feel. A broker can do VA Loan, Conventional Loans, USDA loans,,,,,but not FHA that is just stupid and hurting the country.
NV Broker on 11.13.2008. 11:39
this is a goos letter to send to your state lawmakers regarding Surety Bond:
I just want to bring attention to an issue that is affecting many small businesses in the USA:
FHA has become important mortgage product in today’s volatile market with the elimination of most conventional mortgage loans. Unfortunately there are substantial financial requirements for a “small” broker to get FHA approval from HUD (title II). On small brokers as myself and many other small brokers I know the cost of a financial audit and requirements are a major financial burden. This is especially true as business has slowed to the worst housing market we have seen in history.
Most small brokers have either gone out of business or have had to turn away clients due to the FHA broker approval financial requirements. The small brokers that are still around have had to deal with a substantial loss of business and revenue by not being able to offer FHA loans, making it even more difficult to get their FHA approval. (It’s a double edge sword). It is also not fair that a mortgage broker with 250 employees are held to the same financial requirements that a small broker is with only a few employees. (There should be a size scale) The process to get approved for FHA can cost anywhere from 8 to 15 thousand dollars, plus other financial requirements. I want to mention that I am not allowed to offer FHA, but I can offer government VA loans, it doesn’t make sense.
Currently there is legislation that has passed the house and is supposed to be voted on in the senate.(H.R. 1852) If accepted, this Federal Hosing Authority (FHA) program will allow a Mortgage Broker to obtain a $75,000 Surety Bond in lieu of audited financials. This will dramatically change the makeup of Mortgage Brokers that will have the ability to write mortgages for the Federal Housing Authority (FHA).
I am asking that you to please rally the Senate to get this passed. It will be a great boost for small brokers by allowing myself and countless others to stay in business and get thru these difficult times
Does anyone know if this is changing yet. . I'm about ready after 17 years in the business to give it all up and move to Mexico. . I love where I live I have developed a reputable name for myself and my mortgage company. I can't handle the stress anymore.. . and because of all the preditory lending that went on by CW and now BofA since bailed them out only to be able to write off the bad debt and Lehman Bros, (american express) oh no !! now they want money too.. Well if they want my tax $ to bail them out I need an income to do that . . what if I don't have an income to bail them out. . . now they are going to have to write off my Amx card and my BofA business debt too!! Does this make any sense if only FHA would allow us to keep our doors open they wouldn't have more people unemployed and small business failing. Your comments. .
I'm confused. On 6-9-08 Steven wrote in his "PS" that the bill did not pass. But NV Broker on 11-13-08 provided a draft of a letter to send on the bill. Has the bill passed already or is there still hope?
I agree completely with the Bond requirement to replace the audit. I have been complaining to NFIB about this for years. It's a complete waste of money every year! I dread my audit more than anything in the industry! I’d be happy to write my senator on this issue if it is still alive?? Thanks for the info.
ANGELA ADAMS on 12.18.2008. 09:50
Hi Ryan,
It is my understanding that with the new FHA guy coming in for Obama , Shaun Donovan from NY is for the small 2 man (in my case my husband and I) broker shops the ability to write FHA loans with a bond instead of net worth and expensive audited financials. I have been blogging and emailing people and no response (the main reason I think is that net branch companies don't want to hear this and neither do the trigger lead companies (preditory) so no one is finding this important. . WHAT??? This is so important to our industry and the small broker (in business for 17 years in small town where we care and see our clients accross our desk) . . I would love to get some feed back from anyone out there that might know what this guy's intentions are with small shops and trigger leads. . anyone know??? please email me Angela@themortgagehouseinc.net thx
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