HUD Probes Fees to Non-FHA-Approved Brokers

The Department of Housing and Urban Development is investigating payments of "excessive" fees to nonapproved mortgage brokers by Federal Housing Administration lenders.In the past few weeks, HUD officials have noticed that some FHA lenders are charging borrowers points and paying $4,000 to $5,000 to brokers for simply bringing a customer to their office. Brokers that are not approved by the FHA cannot take a loan application or close an FHA loan. HUD rules do allow nonapproved brokers to refer borrowers to FHA lenders. However, FHA Commissioner Brian Montgomery told MortgageWire that a $4,000 fee is a "little excessive" and that his agency has "ramped up an investigation." HUD officials are also reviewing FHA guidelines for nonapproved brokers and talking with department officials that deal with Real Estate Settlement Procedures Act matters. These fees seem to be "beyond what is reasonable and customary," Mr. Montgomery said in an interview.