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How to become an FHA Approved Lender (Mortgagee)

Two Choices for Quality Control Plans

What are the Requirements?

 

FHA's 2 Page Instruction Memo "How to Become an FHA Approved Lender" is an excellent, simple resource.  There are 4 major requirements

  1. For FHA Approved Lenders - a funding plan.

  2. Application and Fee

  3. Audited Financial Statement meeting Net Worth

  4. Quality Control Plan

FHA's Title II Starter Kit 

Application Forms and Instructions

 

What are FHA's Guidelines for Quality Control Plans?  - There are approximately 40 mandatory components of FHA Quality Control Plans.  We take care of the entire package for you, including your company name, logo, contact information, company biographical information, audit process and reporting process.  Just print and submit with your package.

 

Effective 4/14/2010 FHA States it Will No Longer Approve New Brokers (Third Party Originators)

 

Click here for entire text of announcement Mortgage Brokers, or loan correspondents as FHA refers to them, are no longer required (as of 1/1/10) to obtain FHA approval to originate FHA loans.  Sponsors will approve individual brokers.  See below for chronology.

 

Contact your wholesaler to determine when he or she will begin accepting sponsorship applications under the new regime.  

 

Highlights of Changes

 

- Brokers (referred to as Third Party Originators - TPO)  handled through Sponsor directly - FHA published NO Standards for wholesalers to evaluate TPO, but TPO must meet all FHA criteria
- No Stated Net Worth Requirement
- No Stated QC Process Requirement

- FHA Lender must monitor all activities for compliance
- FHA Lender is responsible for ALL actions of TPO
- Current brokers approved through 1/1/2011

TPO - May No Longer Table Fund - Effective 1/1/2010

 Quality Control Plan Required at Approval

At the time of application you have to submit a Quality Control Plan that describes how you will review closed loans to discover fraud.  We refer to this as a Fraud/Audit and Compliance Module.

 

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 Quality Control Plan required at the time of annual review or examination

HUD requests that lenders have a quality control plan that prevents fraudulent loans from entering the pipeline and becoming closed loans.  HUD will request inspection of this plan at the time of a site inspection.  We refer to this as a broker, banker or wholesaler package.

If you don't have procedures for quality origination, processing or operations - including funding and underwriting - you are not in compliance.

3-4-2010 -  Mortgage Broker Renewal Extended - As proposed in a November 30, 2009, proposed rule (74 FR 62521), HUD is seeking to eliminate FHA approval for loan correspondents. Because this rulemaking is still in process and a final rule has not yet been issued, FHA is extending the deadline for the submission of audited financial statements for loan correspondents seeking renewal of their FHA lender approval for 2010. For loan correspondents with a fiscal year end of December 31, and that would ordinarily be required to renew their FHA approval by March 31, 2010, HUD is providing these lenders with an additional 30 days in which to submit their audited financial statements. These loan correspondents must continue to comply with existing requirements for the submission of their Annual Certifications and renewal fees, but will be given until April 30, 2010, to submit audited financial statements. Again, the deadline for the submission of the Annual Certification and renewal fee has not been changed. Loan correspondents that do not complete their renewal in accordance with the deadlines as specified above will no longer be FHA-approved as of the effective date of the final rule that follows the November 30, 2009, proposed rule.

1-14-2010 - Correspondents are reporting that HUD is still accepting broker (mini-eagle) applications. 

11-30-09 - HUD officially has eliminated the correspondent (broker) approval process.  Current correspondents will not be renewed.  This administrative ruling takes effect in 30 days under expedited rulemaking authority.  Going forward, wholesale lenders will be responsible for assuring that brokers comply with FHA requirements and the requirements of the SAFE Act.   

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