The above captioned Mortgagee Letter was issued June 20, 2008 to remind lenders of existing FHA policy regarding the use of non FHA-approved mortgage brokers when originating FHA-insured mortgages. A copy of ML 2008-17 is attached. In summary, the letter provides that: 1. FHA loan origination services must be performed by a FHA-approved lender or FHA-approved mortgage broker (loan correspondent). See, HUD Handbook 4060.1 REV-2. 2. FHA regulations permit a borrower to engage a broker who is not FHA-approved to assist the borrower in obtaining mortgage financing (see, 24 CFR 203.27(e)), but the loan origination services may not be performed by that non FHA-approved broker and the FHA approved mortgagee shall not compensate the non FHA-approved broker for such services. 3. Lists the loan origination services that are recognized by HUD in RESPA Policy Statement 1999-1. 4. Services that are considered counseling in nature (e.g., educating prospective borrowers in the home buying and financing process, advising the borrower about different types of loan products available, and demonstrating how closing costs and monthly payments could vary under each product) may be performed by a non FHA-approved broker so long as the services provided constitute meaningful counseling, and not steering, and are conducted and paid for in accordance with the requirements of Policy Statement 1999-1. 5. The fee charged by the non FHA-approved mortgage broker for these “counseling type services” must be paid from the mortgagor’s own available assets, must be disclosed on the HUD-1 at closing and a copy of the contract for these services must be included in the loan file submitted for insurance endorsement. Please refer to the attached copy of ML 2008-17 for a completion explanation of FHA’s policy regarding the use of non FHA-approved mortgage brokers on FHA-insured mortgages.

Complete Memorandum