The Federal Housing Administration's efforts to shift the burden of supervising mortgage brokers to actual funders is creating a mini-boom in demand for brokers to bring in homebuyers and refinancing customers.
Some observers had warned that the plan would drive brokers from the lending process. Instead, many lenders have already come up with guidelines to recruit and oversee them and are actively looking to hire.
Wells Fargo & Co., for example, is encouraging brokers to sign up with the lender to originate FHA loans.
The agency's new policy is "excellent news for any brokers who would like to submit FHA business but have never received FHA approval," since now they only need a government-approved lender to sponsor them, Wells Fargo said in a memo to wholesale clients last week.
Similarly, at 360 Mortgage Group LLC, "we've been flooded with applications [from brokers] since the start of the year and we haven't seen a slowdown yet," said Andrew Weiss Malik, the Austin lender's chief operating officer and vice president.
The Department of Housing and Urban Development "is doing it right by putting the liability on those that have the money" — the lenders.
Lenders' broker recruitment would bolster FHA Commissioner David Stevens' argument that eliminating the agency's so-called "mini-Eagle" designation for brokers would open FHA's door to more of them.
"I believe that is the reaction HUD intended when [it] decided to transfer oversight of these third-party originators from HUD to the approved lenders that are accepting loans from them," said Lisa Klika, a vice president of compliance and quality assurance at Guild Mortgage Co. in San Diego.
At a conference in San Francisco last week, Stevens reiterated his rationale for the transfer of oversight: HUD, which runs FHA, simply lacks the resources to police brokers.
