Several changes to the Department of Housing and Urban Development’s Federal Housing Administration approved lender requirements, as posted in Mortgagee Letter 2011-34, were released Friday. Mainly a reiteration of past policies with a few small changes, the mortgagee letter does have the potential to level the playing field for lenders in one particular way.
Previously, FHA-approved lender branches were restricted by states where they were able to operate. A licensed originator working for an FHA approved lender could only do business in the state where his or her office was located and the states that shared its borders. Now, however, with changes regarding the Single Family Loan Origination Lending Area requirements, lenders are subject to the same rules as non-approved brokers, and can operate in any state where they are licensed.
It levels the playing field between lenders and brokers, says Bill Trask, executive vice president/general counsel for Security One Lending.
“It’s a big thing for some of our branch recruits,” Trask says. “It opens up some doors for us, because in the past [those branches] were limited geographically.”
Effective immediately, HUD has made some modifications to lender approval requirements as well as lender operational requirements, including some specifications regarding FHA loan officers, mortgagee owners and office facilities, branch arrangements, DBAs, and others.
Among the changes, approved mortgagees may not engage in “net branching,” and must pay all expenses incurred in the operation of their home, branch and direct lending offices directly. Expenses may not be paid by anyone but the approved mortgagee.
Additionally, HUD redefines the terms “corporate officer,” for which lenders must provide name, credit report and resume in accordance with the HUD Handbook, as well as “owner” for various company types.
For company names, HUD states that lenders are allowed to register up to six “doing business as” (DBA) names per home office or branch, and that any DBAs beyond six be registered with FHA with documentation authorizing their use.
Written by Elizabeth Ecker