As published in Scotsman Guide's Residential Edition, July 2009.
Are you getting the approvals on Federal Housing Administration (FHA) loans that you deserve? Are your loan officers turning away good FHA loans because they don't know how to fight for them? Are the underwriters reviewing your loans new to FHA lending?
If you answered yes to any of these questions, you're not alone. Brokers working with FHA loans might sometimes feel like star basketball players in a championship game being controlled by a rookie referee. Because of this, brokers must advocate for themselves and remind the ref and other players of the rules. Brokers who act properly can save loans from failing.
Here's what to know and how to deal with some of the obstacles that may develop.
There have been many changes to FHA lending recently, and not everyone is familiar with the new order. Often, companies give their originators down-and-dirty training or none at all. As such, loan officers may not realize they can underwrite without credit scores or use concise letters of recommendation to help gain approval.
Rather than lose customers because of a lack of knowledge, brokers should invest in educating themselves and their employees. This includes learning how to document a file to overcome negative information.
Even seasoned brokers need new education and should understand that FHA guidelines differ widely from those of Fannie Mae and Freddie Mac. The ability to use alternative credit reporting, for example, marks a significant difference. Also, FHA guidelines are open to the public and are the same for everyone. Unlike with Fannie and Freddie, there are no enhancements to the guidelines for certain lenders. Brokers can research a particular borrower's specific needs online.
When dealing with new underwriters, education and experience often are a broker's biggest obstacles. One way to prove borrowers' worth is to write a detailed cover letter, referencing the exact rules that pertain to the loan at hand.
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