Brokers eye easier approval; streamlining would help brokers become approved lenders.

Mortgage brokers might be the most immediate benefactor if HUDs proposed streamlining initiative is approved by Congress, and the department is already forging ahead with some of the details in anticipation of that expected endorsement.

FHA Commissioner Nicolas Retsinas, showing an unexpected attentiveness to the plight of mortgage brokers, told a group of more than 1,400 that should HUDs proposal to streamline FHA be approved by Congress, HUD would implement a plan that would allow more of them to become FHA- approved lenders.

FHA is off limits to many of you because of its complexity, and because it is cumbersome, Retsinas told the National Association of Mortgage Brokers during their annual convention in Washington June 20. We need to eliminate [that].

Because most mortgage brokers are small firms, some have had difficulties becoming approved FHA lenders, mostly because HUD requires as much as $8,000 in administrative fees annually for that privilege. Many brokers, unlike their mortgage banking cousins, dont have those resources, said Allan Jones, NAMB director of agency relations.

Consequently, mortgage brokers have been steering home buyers toward conventional programs, like Fannie Maes 97% loan-to-value program, and both Fannie and Freddie Macs 95% loan-to-value programs. NAMB said it originated roughly half of the record $1 trillion in residential mortgage loans in 1993, and a majority went into the conventional market.

And with FHA still looking to bolster its Mutual Mortgage Insurance Funddespite a positive audit from Price-Waterhousehaving access to volume that brokers would provide would only help. Part of HUDs process would eliminate, or greatly reduce, that requirement.

Retsinas said HUD is also considering reducing FHAs eligibility requirements enough to fit them on a wallet-sized card. Right now Id be hard pressed to give you all the eligibility criteria, Retsinas said. It looks like a value meal from a fast food restaurant.

You take one [loan amount] from column A, one from column B, and divide by column C, he said. I dont know what that is, [so] how do we expect the consumersnever mind the users of the programto understand what those options are.

The wallet-sized criteria isnt just an idea, however. HUD is working on producing a prototype set of requirements, Jones said. HUD has consulted with NAMB on the card and has sent a preliminary copy to the trade group for comment.

RELATED ARTICLE: FIA LENDER SEMINARS SET

The Federal Insurance Agency is disturbed mortgage lenders have been accepting flood insurance coverages for condominiums less than adequate, and has set up seminars to make lenders, condo associations and owners aware of a change to its flood insurance policy.

The FIA said the seminars will bring those affected by the change up-to-date. Phase I seminars, for companies that write their flood insurance policies through FIA, will be held between June and August. Phase II seminars are a forum for lenders, insurance agents, condo owners and associations. No timetable has been set for Phase II. For details on locations for Phase I seminars, call the National Flood Insurance Program at (301) 731-5300.

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