FHA Licensing And More

As many of you are aware, FHA has been a hot button lately. With two bills passing the Senate, HR 1752 and HR 1852 FHA reform is well under way. Although the bills are still standing in the Senate the bills are viewed to ultimately pass. The passage of these bills would increase FHA loan limits, create risked based mortgage insurance premiums and allow for a broker to obtain a $70,000.00 bond in place of net worth and audited financial requirements. Many brokers are sitting on the edge of their seats waiting for the passage of this bill so they will not have to spend the thousands of dollars for audited financial statements. We are still not sure if this part of the bill will pass but one never knows until the eleventh hour.

With all of this being said...it is important to know what additional requirements are needed to be licensed and that could effect you regardless of meeting the audited financial requirements or not.

• You must have a staff of at least two full time employees


• All employees MUST be W-2 employees


• Your W-2 employees can only work for one company of the same line of business. For example: If you employ an underwriter to underwrite your FHA loans and then that underwriter goes to another company and underwrites conventional loans, that is prohibited.


• You must meet the specific office requirements


• You must have good credit. Yes, HUD will review your credit and they review it very similarly to a borrowers credit report. If you have current derogatory items on your credit those items must be explained. Recent bankruptcies or foreclosures must also be explained but you will want to check with Lender Approval before submitting your application. Your application fee is $1000.00 and this fee is non-refundable. Better to know before wasting $1000.00.


• Lenders and BROKERS MUST have a FHA compliant QC plan.


• If you are a broker you must have a sponsor. Many sponsors will only take existing approved brokers.

These are just a few items to be on top of and just a quick FYI...HUD is receiving about 1000 applications per month and the majority of them are being rejected for improper or lacking documentation. If you think you can handle the licensing process on your own make sure you take your time in preparing your application and document thoroughly. The Mortgage Licensing Group is always available to perform a final review on your application prior to submitting to HUD. You may contact us to discuss this nominal fee and our process. However, if you decide this application process is not for you and your time is better spent on running your company we are always here to support you in your licensing process.

HUD just recently announced that their auditors are out in full force so make sure you know what you are doing when it comes to making FHA loans. It has currently been announced that the Inspector General of HUD will be supervising all audits. This announcement is huge and this is a message that HUD means business. You can only imagine that if the auditors for HUD are directly reporting to the Inspector General they are going to be dotting every "i" and crossing every "t." Not to mention scrutinizing the loan files with utmost care and detail.

If you decide you and your staff need a refresher course in FHA loans, The Mortgage Licensing Group is holding a seminar on January 14, 2008 in Escondido, California. This will be a two day seminar. In addition, HUD will be speaking at this seminar and will be teaching about FHA loan products and how to properly market these products. It will be an excellent seminar for Loan Officers. You can find more details on this at: http://www.mymortgagelicense.com/

Stay tuned for my next blog on preparing for HUD examinations.

Annemaria Allen

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Annemaria