The Federal Housing Administration has issued a "policy alert" to stop lenders from paying large fees to nonapproved FHA mortgage brokers for simply referring borrowers to their loan officers.The policy alert reminds FHA lenders that nonapproved brokers cannot perform loan origination services and that any fees paid by the lender or financed through the loan would be considered "duplicative" or "unearned" fees that violate the Real Estate Settlement Procedures Act. Department of Housing and Urban Development officials discovered in early September that some lenders were charging points and paying nonapproved brokers $3,000 to $5,000 in fees. HUD officials considered this to be excessive and began calling lenders about the practice. (FHA lenders can pay yield-spread premiums to brokers if they are approved by the FHA.)

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