Investing Mortgagee

 


A Investing Mortgagee may purchase, hold, or sell FHA-insured loans but may not originate FHA-insured loans in their own name or submit applications for the insurance of mortgages. Supervised institutions that are members of the Federal Reserve System, or are regulated by FDIC, OCC, or NCUA may also apply as an Investing Lender. The variance in the requirements for supervised institutions is notated below.

Eligibility Requirements for FHA Program Approval

Online Application Attachment Category

Required Documentation

Standards

Financial Requirements

Required Financial Statements

Independent Auditor's Report comprising audited financial statements including the computation of adjusted net worth; and Unaudited financial statements, if necessary

  • Audited financial statements must be prepared in accordance with GAAP and must demonstrate the Mortgagee has:
    • $1,000,000 minimum adjusted net worth at all times
    • $200,000 minimum liquid assets at all times
  • Audited financial statements must cover 12 months of operation.  For companies operating fewer than 12 months the audited financial statements must cover all months of operation
  • End date of the audited financial statements must align with the Mortgagee's fiscal year end period at the time of application
  • Independent Auditor's Report is to be prepared in accordance with GAAS and GAGAS
  • Independent Auditor's Report and opinion must include the Mortgagee's computation of its adjusted net worth
  • Adjusted net worth and liquid assets both must be computed in accordance with the HUD OIG Handbook 2000.04, Consolidated Audit Guide for Audits of HUD Programs
  • If the end date for the audited financial statements is more than 6 months old, the Mortgagee must also submit unaudited financial statements, signed by a Corporate Officer in ink, for the most recent interim accounting period ending less than three months prior to submission of the FHA application
  • Unaudited financial statements must still demonstrate the Mortgagee has:
    • $1,000,000 minimum adjusted net worth at all times
    • $200,000 minimum liquid assets at all times

Financial Requirements
(Small Supervised Institutions)

Required Financial Statements

Call Report, if necessary

  • If the end date for the audited financial report is more than 6 months old, the Mortgagee must also submit an interim Call Report, signed and dated by a Corporate Officer in ink, for the most recent interim accounting period ending less than three months prior to submission of the FHA application
  • Call Report must still demonstrate the Mortgagee has:
    • $1,000,000 minimum adjusted net worth at all times
    • $200,000 minimum liquid assets at all times

Creditworthiness

Business Credit Report

Commercial Credit Report

  • Commercial credit report for the Mortgagee entity and the Mortgagee's Principal Owner(s) that is/are business entity(s)
  • Credit report must not be dated more than 90 days before FHA application
  • Mortgagee must provide written explanations for all negative items disclosed on the credit report

Business Form

Business Formation Documents

Formation Documents

  • Partnership must submit Partnership Agreement
  • Limited Liability Companies (LLC) must submit Articles of Organization and Operating Agreement
  • Corporations must submit Articles of Incorporation and Bylaws
  • Nonprofit must provide a copy of its IRS Letter of Determination  The nonprofit must also submit all Business Formation Documents required of its business form, e.g. corporation, LLC or partnership

Mortgagee Name

Business Formation Documents

Formation Documents; Assumed Name (dba) Certificate

  • Mortgagee must submit documentation from the state showing it is legally approved to use its institution name or DBA name, if the name differs from that shown on its Business Formation Documents
  • Institution name and all DBA names used by the Mortgagee for conducting FHA business must be registered with FHA

Creditworthiness

Credit Reports on Principals

Personal Credit Report(s) on Principal Owner(s) and Corporate Officer(s)

  • Personal credit report for each of the Mortgagee's Principal Owners and Corporate Officers that are natural persons
  • Credit report(s) must be a Residential Mortgage Credit Report (RMCR) or a Tri-Merged Credit Report (TRMCR)
  • Credit report must not be dated more than 90 days before FHA application
  • Mortgagee must submit a written explanation from the relevant Principal Owner or Corporate Officer for any negative item disclosed on the credit report

Errors and Omissions Insurance

Errors & Omissions Insurance

Full Policy

  • $300,000 minimum coverage amount
  • Insured Party must be the exact name of the Mortgagee
  • Current policy must not expire until after the FHA application process

Fidelity Bond

Fidelity Bond

Full Policy

  • $300,000 minimum coverage amount
  • Insured Party must be the exact name of the Mortgagee
  • Current policy must not expire until after the FHA application process

Funding Program

Funding Program

Line of Credit; or,
Agreement with financial Institution

  • $1,000,000 projected investment in property improvement, Manufactured Housing or real estate loans or mortgages
  • Must be issued directly to the Mortgagee
  • Must not expire until after the FHA application process

Ownership and Personnel

Resume(s)

Resume(s) for Corporate Officer(s)

  • Must cover most recent 7-year period
  • Include current resume for each person identified as a Corporate Officer who will be directly involved in managing, overseeing, or conducting FHA business

Ownership and Personnel

Resume(s)

Resume for Officer in Charge

  • Must cover most recent 7-year period
  • Must provide enough detail to demonstrate person has 3 years of experience in the specific Mortgagee functions or activities that the Mortgagee is seeking approval to perform
  • Person must be employed exclusively by the Mortgagee, if applying for Servicing Authority

State License or Registration

State License or Registration

Lending License

  • State-issued lending license, registration or equivalent approval for the state in which the home office is located
  • Alternative document can be NMLS registration showing an Approved, Active license

State License or Registration (Supervised Institutions)

State License or Registration

Charter Certificate

  • Active chartered institution
  • Alternative document can be NMLS registration showing an Approved, Active license

Quality Control Plan

Quality Control Plan

Quality Control Plan

  • Quality Control Plan is required if Mortgagee is seeking approval to perform Servicing for FHA-insured mortgages
  • Plan must include all requirements from the Handbook 4000.1 Section V.A.1 through V.A.4, as applicable to the Servicing activity