Only a few days after publishing proposed rules to help reduce risks to the Federal Housing Administration’s single family insurance fund, HUD has published a Frequently Asked Question document addressing the possible changes.
The proposed rule would increase net worth requirements of approved reverse mortgage lenders from $250,000 to $2.5 million within three years of the effective date of the rule and makes lenders liable for the practices of their correspondent mortgage brokers.
The FAQ addresses the possible changes to lenders net worth as well as the status of reverse mortgage brokers and their FHA approval.
Do mortgage brokers who are FHA approved nonsupervised loan correspondents have to renewal their approval?
HUD issued a press release 09-177 on September 18, 2009, that included an announcement that the Department is going to pursue rule making to stop approving mortgage brokers and other types of loan correspondents.
HUD then issued a press release 09-216 on November 30, 2009, that announced the publication of a proposed rule to stop approving brokers and other types of loan correspondents.
Until that process is completed and the change takes effect, all existing FHA approved mortgage brokers will need to maintain their FHA approval (including its annual renewal) in order to continue to originate FHA loans.
Is HUD eliminating audited financial statements for FHA loan correspondents?
FHA is working on such a change, but it has not taken effect at this time.
There has been no change in the FHA’s current requirement that a mortgage broker must submit a CPA audit of their financial records to become a FHA nonsupervised loan correspondent. In addition, there has not been any change to the current annual renewal requirements for nonsupervised loan correspondents.