The Department of Housing and Urban Development (HUD) announced in a mortgagee letter late last month that origination fees for Federal Housing Administration (FHA) mortgages will no longer be limited to 1%. Origination fee caps on Home Equity Conversion Mortgages and Section 203(k) Rehabilitation mortgages, however, will be retained, FHA Commissioner David Stevens wrote.
Mortgagee letter 2009-53 came two days before new Real Estate Settlement Procedures Act (RESPA) requirements took effect Jan 1. As part of the changes, lenders are required to use HUD's new good-faith estimate (GFE) disclosures.
Mortgagees are required to include the sum of all fees from origination-related services in Box 1 on Page 2 of the new GFE. Because the figure represents all compensation to the lender and/or broker, it will most often exceed the origination fee caps set for government programs, Stevens said in the letter.
"Although the new GFE requires that lenders provide an aggregated cost for origination services, if a government program or state law requires that lenders provide more detailed information to specify distinct origination fees and charges, lenders may itemize these charges in the empty 800 lines of the HUD-1, to the left of the column," the letter further instructs.