No, I do not mean liberal as in political affiliation, but rather in the “Hey heres a bunch of Government money, go enjoy yourself” way!
The Federal Housing Administration (FHA) has announced that it is investigating 240 approved lenders for failure to meet and uphold it’s requirements. For those of you unfamiliar with FHA financing, it plays an integral part in the US housing market. In essence, FHA financing is for the individual with good credit, and a responsible track record, but without a large surplus of money to make a substantial down payment.
By requiring the borrower to pay “mortgage insurance”, to insure the investor behind the note is not left high and dry in the event of a default, FHA can offer industry best rates on mortgages; rates that are usually reserved for those who make 15 -20% down payments. As a tool for millions to acquire property on their current budget, it is responsible for most of the financing on properties in $400’s and below. However to obtain this type of financing there are a whole slew of rules and requirements that lenders must follow to qualify prospective mortgagees, and the Mortgagee Review Board (MRB) department of FHA is charged with the task of making sure that these lenders are playing by the rules.
The MRB has formally charged 240 FHA approved lenders with violations ranging from quality control requirement failures, to charging borrowers exorbitant fees.
If allegations are found to be true these lenders could face punitive and monetary penalties, in addition to the revocation of there “approved to offer FHA financing” status; however each and every “sentence” will be unique and will not be handed down until all appeals are addressed.
To find out who has been charged for what follow: http://www.gpo.gov/fdsys/pkg/FR-2011-07-29/pdf/2011-19293.pdf
If you are in the process of obtaining FHA financing or are FHA preapproved, I would make sure your lender is not on this list; as if they are it is questionable as to when and if they are going to be able to fund your deal.
Check back with us for more information and developments on this as the investigation furthers.
John is the Vice President here at JohnHart, and as such is responsible for managing and directing the firm towards obtaining its ultimate goals.
He is also one of our main contributors on the Blog. (please see his profile page on the main site for more information.)
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