Identify cost reduction opportunities – NMP
These are the kinds of reasons why I am so motivated to get involved and advocate on behalf of the mortgage industry. I’m active in the Community Home Lenders Association (CHLA), and one of the changes we’re really advocating for is shortening the duration of Mortgage Insurance (MI) fees on FHA loans. This seemed like another example of how much more expensive it is to do an FHA loan compared to a conventional loan, when the mission should be in affordable housing.
In trying to answer the question “why are FHA loans so much more expensive to make?”, I found my next and final piece of information. The FHA and USDA did not receive these “secondary use fees”. It didn’t go into the pockets of those agencies; rather it went to offices. They justify this fee since the FHA and USDA have to look at the credit report to purchase/insure the loan. In my opinion, as an industry, we should pay particular attention to the costs associated with affordable housing loans.
While some of these issues may never change and/or exist for reasons beyond my knowledge, I needed to know exactly what all the ins and outs of this process looked like for our team. Thanks to all of this, I was able to work closely with our team to create more efficient processes and eliminate unnecessary expenses. I think it’s good for the company and the consumer when we question some of the ideals inherited from the past. For example, “Always run AUS (Automated Underwriting Systems) at the start.” Maybe you should, maybe you shouldn’t, but each piece of information helps determine the right path for your business and your borrowers.
Whatever happens with these initiatives, at least my research was a good way to know exactly where every dollar is going. I hope my findings will help others in their efforts to be more mindful and profitable.