Department of Housing and Urban Development officials are finding that non-FHA-approved mortgage brokers are charging "exorbitant" fees on Federal Housing Administration loans in possible violation of HUD rules."We are seeing exorbitant fees," HUD officer Mark Ross told a Mortgage Bankers Association conference, adding that HUD officials are reviewing the matter. Mr. Ross also reported that some FHA direct-endorsement lenders are soliciting nonapproved broker business with misleading advertisements implying that the broker can take the application or close the loan. "That is not allowed," he said. In addition, HUD has seen a "flurry" of applications for direct lending branches that are supposed to be used as call centers or Internet portals to solicit and take mortgage applications directly from borrowers. But some FHA direct-endorsement lenders are using the direct lending branches to solicit loans from nonapproved brokers throughout country. "That wasn't the intent," Mr. Ross said.

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