What some in the industry have called “dramatic” changes to FHA lender approval requirements through Mortgagee Letter 2011-34, announced last week, could open up serious opportunity for mid-sized lenders who operate in many states across the country.
Under the new rules, lenders are no longer limited by their office locations in terms of the states where they can operate. Prior to the change, they were limited to the states sharing a border with the state where the office was located.
“It hopefully allows us to expand into more states much more easily,” says Josh Shein, CEO of Great Oak Lending. “We still have to get state licensing in those states, but having the FHA process be not restrictive as it was in the past is really going to help us expand into different areas.”
The lack of restriction on lenders, which was rumored for some time, was called a “dramatic” change by Weiner Brodsky Sidman Kider PC, counsel for the National Reverse Mortgage Lenders Association, in a special alert email sent this week. “This is a dramatic expansion of the ability of FHA lenders to make loans nationally,” the email stated.
The changes stand to spark some competition in areas where the licensing process is easiest. Additionally, it could serve to benefit lenders which operate under certain models.
“This would more easily open the lenders to a call center/direct model in my opinion, and encourage them to get licensed in additional states if they’re not already,” John Lunde, Reverse Market Insight president and co-founder told RMD in an email.
Lenders say the expansion could happy fairly quickly, now that their branch operations are not limited within the states that they border.
“This definitley opens up the door for other states without having to open an actual office to be able to do FHA loans in other states,” says Amanda Clinton, operations manager for Net Equity Financial. Currently, Net Equity Financial operates mainly in the states surrounding Maryland, where the company is based. “Hopefully, we will start getting licensed in some other states and this will allow us to be able to do FHA loans in those states immediately,” Clinton says.
“It allows everyone to be able to reach more consumers, and helps everyone’s business,” Shein says.
But for those that operate call centers, the opportunity may be even greater.
“This is really good news,” says Reza Jahangiri, CEO of American Advisors Group, which operates a reverse mortgage call center based in Irvine, Calif. “[It] should open up the field for bigger players.”
Bigger, and potentially more phone-centric.
“I think we’ll see more lenders open call center/direct operations for reverse and put more emphasis on that channel for those that have existing,” Lunde says.
Written by Elizabeth Ecker