We got some very good news for the nation’s small business mortgage brokerage community. FHA recently had announced that they would allow FHA lenders to fund loans originated by mortgage brokers not directly approved by HUD. What this means is all those mortgage brokers who did not have the ability to become FHA approved can now start serve a market argued to be anywhere from 15-30% of the market for new home loans.
The big question was if major lenders would pick up on the ruling and actually allow historically non-fha-brokers to originate this product. The product is itself complex as compared to conventional products and requires a highly level of discipline and even requires specialized FHA DE's or underwriters. The answer to the question at hand appears to be answered as Flagstar Bank has released comments about the ruling and a recently held conference call with HUD. Brokers should expect by December of this year to be able to originate and deliver FHA loans for funding.
In what has been a very difficult several years for the mortgage broker, and with new legislation that would further impair the brokers ability to compete, this is a small silver lining.
Of course the broker has a long way to go. Broker market share was once reported to be as high at 80% of all mortgage originated, that number is now south of 14%. With that drop in market share, many have left the business all together. It is very clear, many just weren't prepared for the brutal shut-off - there was no slowdown.
Only time will tell if pending legislation and new originations will keep the broker afloat - it wasn't the brokers fault alone that the mortgage market to collapse, but they are the last group related to finance that hasn't recovered. Banks are now reporting record earnings and the investment banks cannibalized themselves and are paying out record bonuses. Let's hope the small businessman mortgage broker again has his chance to show his professionalism and dedication to providing quality mortgage finance.
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