Officials with the U.S. Department of Housing and Urban Development want mortgage brokers in the state to give Federal Housing Administration loans another chance.
“I’m asking those of you who aren’t doing FHA loans to give FHA loans another look,” Ben Johnson, director of HUD’s Denver Homeownership Center, told a lunch gathering of the Colorado Association of Mortgage Brokers on Tuesday.
The FHA is seeking a major overhaul in Congress to make its loans more competitive. Changes include eliminating a 3 percent down payment, raising loan limits and streamlining appraisal and underwriting procedures.
FHA’s share of mortgage originations has dropped from 16 percent of the market in 2000 to under 5 percent more recently.
Johnson warned that the long-standing loan program was at a crossroads – either it will make the changes needed to stay competitive or fade away.
But some mortgage brokers expressed concerns that HUD could get too lax in who it will work with, diluting a new Colorado registry launched this year.
Mortgage brokers here must undergo a fingerprint-based criminal background check before registering. HUD-approved lenders and those working at federally regulated financial institutions are exempt.
Under less strict guidelines being proposed nationally, someone could spend under $1,000 for a surety bond and win HUD approval, said Jason Berman, outgoing president of the state brokers association.
Once approved, they could avoid the state’s requirement of a criminal background check.
“That will open a giant loophole,” Berman said. “We want to see them get registered.”
About 5,600 people have submitted background checks to get on the state registry, which has accepted 3,200 mortgage brokers, said Bill Kidwell, CAMB’s president-elect. The gap is due to a backlog in processing the background checks.
Staff writer Aldo Svaldi can be reached at 303-954-1410 or asvaldi@denverpost.com.
