A week after it was disclosed that Wells Fargo Co. would only engage in new FHA Streamline refinancings from its own servicing portfolio, it appears that other large lenders might follow suit.
At press time, the decision by at least two other top 15 ranked lenders to cap FHA Streamlines could not be confirmed. But loan officers, talking off the record to National Mortgage News said the chatter about limiting participation is tied to “capacity issues.”
Certain lenders do not want to hire additional staff to handle the extra volume and instead prefer to cater to their current FHA customers only.
However, such a decision is hurting the ability of small correspondents and loan brokers to participate in the program.
“I have not heard of any final decisions about what others will be doing or not doing,” said David Lykken, managing partner of Mortgage Banking Solutions. “However, I can tell you that the general sentiment I am hearing out there is to not do them.”
One broker based in Denver said the decision by Wells and others not to participate is problematic because it means that any broker that sends a loan to the bank will eventually “wind up scrambling like a madman.”
Another broker said certain lenders fear that in time FHA might change the reduced upfront premiums.