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Originally posted by South Shore


Our program is in full compliance and totally accepted by HUD and all of our national and regional wholesale investors. We are well established (since 1986) and our program is very clear with specific procedures and strict QC. With over twenty years closing FHA loans we have never been described as marginal; that is a new one.

This is nothing new, just a reconfirmation that HUD posted on 10/31/07.

***POLICY ALERT – RESPA/FHA EXISTING POLICY REGARDING NON FHA-APPROVED MORTGAGE BROKER FEES IN FHA MORTGAGE TRANSACTIONS***

The subject alert reconfirms existing FHA policy regarding the use of non FHA-approved mortgage brokers. FHA loan origination services must be performed by a FHA-approved lender or FHA-approved mortgage broker (loan correspondent). A loan correspondent may be compensated for the actual loan origination services it performs either directly by the consumer or indirectly by the FHA-approved lender without being in violation of either the RESPA statute and regulations or FHA regulations.

In transactions where the mortgage broker is not an FHA-approved broker, the loan origination services cannot be performed. Under these circumstances, RESPA would prohibit the payment to the non FHA-approved mortgage broker because those services, under FHA regulations, would have to be performed again by either an FHA-approved lender or loan correspondent. The payment to the unapproved broker for duplicated services amounts to an unearned fee in violation of section 8(b) of RESPA. Further, this payment also acts as a disguised referral fee for steering the borrower to the FHA-approved lender or loan correspondent which is in violation of section 8(a) of RESPA.

While a broker who is not FHA-approved may assist a prospective FHA borrower in obtaining an FHA loan, the non-approved broker cannot perform required FHA loan origination services. 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 included in the loan file submitted for insurance endorsement.

Under no circumstances, may a borrower pay a fee that is not commensurate with the amount normally charged for the similar services, goods or facilities. If the payment or a portion thereof bears no reasonable relationship to the market value of the goods, facilities or 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).

RESPA provided further guidance to industry regarding payments by lenders to mortgage brokers in Policy Statement 1999-1. While the policy statement specifically speaks of lender payments to mortgage brokers, those payments are indirectly paid by the consumer and the policy statement would apply equally to payments made directly by the consumer.

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For those non-FHA brokers who may have a client in need of FHA financing, I am directly available to discuss our Program and your scenarios for properties in FL, MD, DE, NY, CT, MA, IL, MN, AZ, and CO. Have a scenario? Send me the 1003 and credit for same day review!

Neely Mondello; DE
South Shore Mortgage
866-237-7452 x242
FAX: 631-574-1418
neelymondello@myfastmortgage.com

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Originally posted by South Shore

Our Company (est. 1987) has a well established Affiliate Program for non-FHA approved Brokers and you can assist your existing client with FHA product.

HUD has raised their loan limits and we can now save even more of your deals that will not work conforming but will FHA! Fannie has also raised limits but require 660 scores, have more LTV restrictions and do not offer cashout for those new 'Jumbo-Conforming' products. (FHA guidelines provide for 95% on cashout refinances and for purchases we can provide 97% LTV w/ up to a 6% seller's concession. No declining market reductions either!)

Our focus is to work hard to close your clients loans (as they are yours), and to build a long term relationship with your company. You are recognized as the Broker, can make up to 2% Broker Fee, payable right on HUD; no ysp.

I am directly available to discuss our Program and your scenarios for properties in FL, MD, DE, NY, CT, MA, ME, IL, MN, AZ, and CO. Higher FHA loan limits are in effect!
Have a scenario? FAX or e-mail me your 1003 and credit for same day review!

Neely Mondello; DE
South Shore Mortgage
866-237-7452 x242
FAX: 631-574-1418
neelymondello@myfastmortgage.com

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Originally posted by terrapin52

With that ruling, do the "fees paid from the borrowers" funds i.e. our commission for referring the deal, allow DPA's. In other words, is it possible to do these transactions and have the borrower still come to the table with $0?

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Originally posted by South Shore

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Originally posted by terrapin52

With that ruling, do the "fees paid from the borrowers" funds i.e. our commission for referring the deal, allow DPA's. In other words, is it possible to do these transactions and have the borrower still come to the table with $0?

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Hi Terrapin52;

The DPA must always go towards the down payment; however, FHA does permit for up to a 6% sellers concession, which would go towards all closing costs (including broker fee). If structured properly the combination of a 6% sellers concession and a DPA minimizes the borrower's out of pocket funds.

Keep in mind too that if the seller will not participate in a DPA, the 6% seller's concession really helps; and while a borrower is required to contribute 3% of his own funds, that can still come from a gift other than a seller participating DPA.

Thanks; -Neely

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Originally posted by South Shore

DPA never goes towards closing costs. DPA can cover 3% of borrower's contribution.

Closing costs can be covered by seller's concession (up to 6% of purchase price).

So, yes, it is possible for a FHA file to be structured where the borrower will not need to come up with any money.

However, also keep in mind that reserves do help a file obtain an automated approval, and if a file needs a manual underwrite, reserves are always a strong compensating factor, even if borrower does not need to utilize their assets to close.

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Originally posted by South Shore

Hi Chris;

You are reading the HUD notice correctly. We have stringent guidelines that were re-confirmed with HUD and our investors to comply with everything you mentioned (and more).
If you would like more information, please feel free to give me a call.

-Neely

Would you shoot me over an email outlining what duties are allowed?

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Originally posted by jhendizadeh

In regards to the broker fee being paid on the hud. Does this mean that the broker fee is also made out to the broker who is assisting in the loan or is it in the name of for say south shore mortgage? Thank you

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Originally posted by South Shore

Thank you. That is a repost which has been posted earlier on this thread and as well as published by HUD on 10/31/07.

I reiterate, our Program is very specific and meets HUD's guidelines for non-approved brokers as well as receives the thumbs up from all of our National investors.

For those non-FHA brokers who may have a client in need of FHA financing, I am directly available to discuss our Program and your scenarios for properties in FL, MD, DE, NY, CT, MA, ME, IL, MN, AZ, and CO.

Neely Mondello; DE
South Shore Mortgage
866-237-7452 x242
FAX: 631-574-1418
neelymondello@myfastmortgage.com

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Originally posted by bmoran

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Originally posted by South Shore

Thank you. That is a repost which has been posted earlier on this thread and as well as published by HUD on 10/31/07.

I reiterate, our Program is very specific and meets HUD's guidelines for non-approved brokers as well as receives the thumbs up from all of our National investors.

For those non-FHA brokers who may have a client in need of FHA financing, I am directly available to discuss our Program and your scenarios for properties in FL, MD, DE, NY, CT, MA, ME, IL, MN, AZ, and CO.

Neely Mondello; DE
South Shore Mortgage
866-237-7452 x242
FAX: 631-574-1418
neelymondello@myfastmortgage.com

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Like I said good luck
No one from HUD ever told you it was ok to pay 1-2 points to a non approved broker
Not her to argue with you just trying to help others avoid getting in trouble

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Originally posted by bmoran
Like I said good luck
No one from HUD ever told you it was ok to pay 1-2 points to a non approved broker
Not her to argue with you just trying to help others avoid getting in trouble

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Originally posted by scottanthony

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Originally posted by bmoran
Like I said good luck
No one from HUD ever told you it was ok to pay 1-2 points to a non approved broker
Not her to argue with you just trying to help others avoid getting in trouble

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This is not as hard as you think. HUD's letters are much more ambiguous than you may think. The question is what is a 'fair' price for the services rendered by the non-fha broker. As long as the client and the non-fha person come to an agreement about the price of services beforehand, it should be just fine. I have done this before and yes, it is legit. The non-fha broker is basically 'consulting' or acting as an 'agent' for the client and not a mortgage broker. In order for this to be legit, the non-fha broker should not provide any details from the original application to the Fha broker other than contact info. The FHA broker needs to do all the work including taking a fresh app directly from the client and running their own credit. This is not cobrokering or a referral fee because the FHA broker is not paying the non-fha broker one penny.

Keep in mind, both brokers must be legally licensed in the states that the property is located in.

In a parallel idea, a buyer can hire a realtor to only perform duties such as drafting the PSA and subsequent legal docs and agree to be paid a flat fee directly out of escrow from the buyer. All he/she needs to do is have an agreement and submit an invoice to escrow.

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