Some loan correspondents for the Federal Housing Administration will be able to maintain their approval beyond the upcoming deadline.
Under a final rule from the Department of Housing and Urban Development, FHA-approved loan correspondents had until Dec. 31 to FHA-insured mortgages in their names.
But HUD has learned that a significant number of loan correspondents will not be able to close their loans by the deadline, according to a copy of a letter from FHA Commissioner David H. Stevens provided by Patton Boggs LLP. Uncertainty in the timing in the lending process that is outside the control of the lender is driving a majority of the delays.
So the deadline to maintain loan correspondent approval has been extended to March 31, 2011.
“If we do not extend that deadline, the inability of currently approved loan correspondents to close mortgage loans in their names will likely disrupt the loan processes of a significant number of lenders,” Stevens explained. “This could negatively impact many borrowers who have already qualified for loans and who may be compelled to work with a new mortgage lender and incur additional costs.”
Eligible loans under the extension must have a firm commitment from HUD for insurance and DE underwriter approval by Dec. 31. The closings must occur by March 31, 2011.
Also, the deadline for obtaining unconditional direct endorsement approval is being extended until July 1.
“After reviewing your comments regarding transitioning to compliance with the new changes, we are extending certain effective dates in order to give our lending partners more time to transition to their new business models,” the letter said.
