FHA to deputize mortgage lenders
The Federal Housing Administration (FHA) will seek to put more pressure on mortgage lenders to monitor and police mortgage brokers originating FHA backed mortgage loans. The FHA does not directly lend money to borrowers, but instead, backs direct lenders who underwrite FHA mortgages. The lender must comply with strict FHA underwriting guidelines. During the housing boom when sub-prime loans were rampant the FHA did not back off of it’s underwriting guidelines. As a result, the number of brokers originating FHA backed mortgages grew from 5,579 at the end of 2007 to 9,043 by the end of 2009. The FHA does not have the resources to monitor the growing number of mortgage brokers originating FHA backed mortgages and sees this as the best possible solution to ensure they are ensuring good mortgages. The FHA will also increase the net-worth requirements for lenders from $250,000 to $1 million.
