Lydian Seeking to Leverage New FHA Expertise.(Special Report)(Federal Housing Administration)(Lydian Data Services)

Boca Raton, FL-Realizing that more and more lenders are looking to get into FHA but have little real experience on how to process these loans, Lydian Data Services here has established Lydian Data Government Services, a new subsidiary providing mortgage processing, closing, post-closing and quality control services for FHA and VA loans.

According to a 2007 Government Accounting Office report, FHAs product restrictions and lack of process improvement relative to the conventional market was largely responsible for the decline in market share, despite comparing favorably in cost to the subprime programs that largely eclipsed them. The collapse of the subprime market has led to the resurgence of interest in FHA, and recent revamping has positioned the agency to reclaim the volume it once enjoyed. GAO expects FHA to fund 10% of home purchases in 2008 and 15% in 2009, continuing to levels not seen in over a decade. So how do lenders get their piece of the pie?

We have formed a new subsidiary called Lydian Data Government Services realizing the renewed demand for FHA, explained Brian Fitzpatrick, executive vice president of Lydian Data Services. This will focus on FHA and government loans. Well be an outsourcer for lenders that are experiencing barriers to entering FHA. FHA was designed to do loans for the underserved credit markets. That credit spectrum was completely served by subprime and now thats not there anymore so FHA is going to experience a dramatic increase in market share.

But is FHA truly so complex that lenders would need to outsource the processing of these loans to a vendor? Another reason why lenders decided to leave FHA for subprime was because FHA was infinitely more complex, answered Mr. ...