Following is the text of a letter sent by Nicholas Retsinas, assistant secretary for housing of the Department of Housing and Urban Development, to FHA lenders. His footnotes have been inserted into the text in brackets.

It is the policy of many FHA-approved lenders to permit overages to be charged in the origination of FHA-insured single-family mortgages. Overages occur when loan officers are allowed to charge a higher interest rate, origination fee, or discount points for a loan than the lender's market rate for FHA-insured loans during the same period of time. The loan officer may be permitted by the lender to retain all or some portion of the overage.

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