Net Branch – How important is FHA?

Net Branch – How important is FHA?

Up until 18 months ago most people would have said – not so much!

Today it’s another story. With the Fed take over of Fannie and Freddie comes a very strict requirement for the two agencies to cut their portfolios by over 60%. This will mean less lending and more restrictive criteria for both agencies.

That puts the focus on FHA to pick up the slack.

In the last 18 months many companies have seen their FHA originations increase 2 -3 times.

With the current and future increases in FHA production I don’t see any other path for FHA to follow other than to make it tougher for companies to get approved to do FHA business.

If you are considering a net branch opportunity you should spend a little extra time reviewing each company’s FHA history using Neighborhood Watch
and you should ask questons to determine how FHA loans are originated at those companies.

There are two basic models. Local in branch origination and processing or coporate processing of FHA loans.

Local means that your branch gets it’s own FHA connection number and you keep full control of the file from initial contact with the borrower all the way to funding.

Corporate means that after you take the initial application the file goes to a processing center to complete the loan process.

Before you join a company make sure their policy on the issue is in line with the way you want to do business.

As a net branch manager you should plan on FHA being an important of your business day for quite some time. Make sure you pick a compamy that meets those needs.

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