American Banker (04/16/08) P. 1; Berry, Kate
Although increasing FHA-insured mortgages is a key component of the plans proposed by House Financial Services Committee Chairman Barney Frank, D-Mass., and Senate Banking Committee Chairman Christopher Dodd, D-Conn., to ease the housing crisis, experts say such a program would cause major bottlenecks in the lending pipeline. They note that lenders would need more in-house underwriters--as contract underwriting is prohibited under FHA rules--and upgraded technologies to handle demand. "Because the demand for FHA loans had subsided dramatically in recent years, lenders stopped investing in systems and infrastructures to support FHA originations," explains LenderLive Network Inc. President Rick Seehausen. However, Brian Chappelle of the Washington, D.C.-based consulting firm Potomac Partners says lenders do not need new technology to access the Web-based FHA Connection application system, which is compatible with loan origination systems already in place.
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