FHA Eliminates 1% Origination Cap
Finally they make it official.
See Mortgagee Letter 09-53 at the usual place. http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-53ml.pdf
by oldbe December 30, 2009 5:07 PM
oldbe, does this mean the days of 5 on the front and 2 on the back are here once again?
by vine stone thrower December 30, 2009 5:30 PM
HUD undoubtedly believes that their wonderful, amazing new GFE will create so much competition in the marketplace that they no longer need to worry about setting a maximum fee on FHA transactions...
by oldbe December 30, 2009 5:48 PM
Broker fee + origination fee or 2% origination = same thing? Fuzzy math
by Snapper December 30, 2009 6:08 PM
Section 32 rears its ugly head once again.
by TennesseeTuxedo December 30, 2009 6:08 PM
Calm down Tux. We may have just been presented with a time machine set for 2002.
by BigHappy December 30, 2009 7:02 PM
This doesn't open the flood gates.
The single origination charge on the new GFE must include all admin and processing fees related to the origination, and both the lender's and broker's compensation.
HUD acknowledges that 1% will not work with the structure of the new GFE aggregate requirement and lifted the limit. Costs still have to be reasonable and customary.
You can count on them coming up with some type of limitation in the near future. It is already being discussed.
Same limits still apply to HECM's and section 203(k) rehab loans. No change there.
by Encompass mama December 30, 2009 7:24 PM
The way I understood it was the 2% includes YSP, so the mosty a BROKER can make on an FHA is 2%. Lenders can make the 2% plus any SRP they want. You may think you are making more, but if you are a broker you will probably be making less.
by Vinnie The Leg Breaker December 30, 2009 8:11 PM
every lnder has a cap anymore anyway...it's just that now our orig is gonna be 6% since the borrower is going to be credited back 2% in YSP the lender charges 1.5% in fees and that leaves you the same 2.5% you had before...
by Donktard Borker December 31, 2009 9:40 AM
If your charge is 6% it may violate HOEPA, depending on who is translating the statutes, and many states have capped it a 5%. It is all upfront money now.
Problem is they will have to rewrite their regs to accomodate this new form.
by Encompass mama December 31, 2009 10:24 AM
I may be wrong but I believe that VA has not changed their 1% cap. Can you say "no more VA loans being done".
by The Questioner December 31, 2009 4:34 PM