You cannot get an FHA loan from just any mortgage broker.They must have what is called a mini eagle which certifies them as a”specialist”. Without this, they are simply acting as a middleman and are being compensated for a referral.

     Lately, I have been solicited, or shall I say bombarded, by companies that want to offer me compensation for doing nothing.All I have to do is provide an FHA qualified borrower and refer them to the other guy (who has a mini eagle) and they will pay me up to 3% of the loan as a finder’s fee.

     Wow, that sounds great, but not really ethical.It is not ethical to do this for several reasons, I do not need to be compensated for referring a borrower to another guy (neither does my doctor but that is a different story), not all borrowers require FHA loans and my fee directly or indirectly comes out of the borrowers pocket.

     As we read on, FHA is the new subprime lender, “helping” people get out of subprime loans into more palatable products.I personally feel that if they can not afford to make their current payments, than lowering the monthly nut by 200 bucks just is not going to do it. It is just another way to rip off people while dragging out the inevitable foreclosure. I have has many borrowers over the years ask for FHA loans.If I feel it is the only way and they can handle it, I refer them to a respectable in house loan officer I use at Wells Fargo.I receive nothing in return.In order for the referring broker to receive this fee, the borrower is charged extra points or is given a higher interest rate to get more yield spread premium on the back.

     It did not take FHA long to get wind of the referral/ponzy scheme. Apparently, there are strict warnings going out that only mini eagles can do FHA loans and referral fees are not allowed to be given to anyone. Therefore, only go to a bank or FHA specialist.Ask to see the certificate for the mini eagle and again enquire about the experience of the loan officer in FHA loans and asks to see the fees in advance.

     I never believed in FHA and do not believe it is any answer to the problem at all.As I wrote in previous entries, it is just another way to breed fraud in loan applications and make more money. Now, how is the going to help the poor slob that should not have taken the loan out in the first place?Not – just the mini eagle and the referral source.

-Dale Siegel