U. S. Department of Housing and Urban Development Washington, D.C. 20410-8000 November 14, 1995 OFFICE OF THE ASSISTANT SECRETARY FOR HOUSING-FEDERAL HOUSING COMMISSIONER TI-435 TO: ALL TITLE I LENDING INSTITUTIONS SUBJECT: REVISED TITLE I LENDER APPROVAL HANDBOOK The Department has issued a revised and updated Title I Lender Approval Handbook ( HUD-4700.2 REV-1, dated September 1995) which reflects changes in the lender approval process that have occurred since the August 1984 version was published. The Handbook provides a detailed guide to the Department's policies and procedures for the approval and annual recertification of lenders and loan correspondents for participation in the Title I loan insurance programs. Lenders are urged to review the Handbook to be certain they are in compliance with the Department's requirements, The following paragraphs highlight some of the significant changes. Approved Lending Areas Lenders (including loan correspondents) are authorized to transact Title I business only within a geographic lending area approved by the Department. In the past, a lender was approved only for the HUD field office jurisdictions where its home office and branch offices were located. The Department recognizes that many lenders are able to serve lending areas consisting of several field office jurisdictions, and therefore, the Department is now approving expanded lending areas in most parts of the nation. Attached is a copy of Appendix 3 of the Handbook, which provides a list of HUD field office jurisdictions comprising these expanded lending areas. Lenders that were approved prior to the effective date of the Handbook will have their approved lending areas adjusted to include the additional field office jurisdictions shown in Appendix 3. It is not necessary to request approval for these expanded areas. Lenders wanting to do business outside of their approved lending areas will still be able to request extra-territory approval. However, the lender must have been approved for at least one year before making such a request. The policies and procedures for applying for extra-territory are in Paragraph 5-3. Requests for extra-territory should no longer be sent to the Title I Insurance Division, They should be sent to the following address: U.S. Dept. of Housing and Urban Development Lender Approval and Recertification Division 451 Seventh Street, S.W., Room 9146 Washington, D.C. 20410 2 Approval for Both Title I Programs Effective immediately, lenders will no longer need to apply for separate Title I contracts of insurance to originate both property improvement and manufactured home loans. Lenders will automatically be approved for both loan insurance programs, and will be able to originate loans and submit claims under one lender identification number. Approval as an Investing Lender In April 1995, the Department revised the Title I lender approval regulations in 24 CFR Part 202 to create a new category of approved lending institutions, called "investing lenders." This change was made to provide opportunities for a wider range of financial institutions, including charitable and nonprofit associations and pension funds, to invest in Title I loans, without having to maintain the staff and facilities needed for loan origination and servicing. Paragraph 3-5.E. of the Handbook describes the documentation needed to apply for approval as an investing lender. Expedited Processing for Loan Correspondents Effective immediately, the Department will provide expedited processing on any application for approval as a loan correspondent, provided that the sponsoring lender has an adjusted net worth of at least $ 1,000,000 and certifies that the loan correspondent's application meets all of the requirements of the lender approval regulations and the Handbook Paragraph 3- 4 of the Handbook outlines the conditions that must be met to receive expedited processing. Application Fees The Department is increasing its application fees. These new fees apply to all applications received by the Department on or after November 15, 1995. o The fee for approval as a lender or loan correspondent is $ 1,000. o The fee for approval of a branch office is $300. o The fee for approval of an additional sponsor for a loan correspondent is $300. o The fee for conversion of an already approved lending institution to another lender type is $300. The Handbook provides that there will no longer be a fee for a currently approved Title II mortgagee to become approved as a Title I lender or to have its Title II branches approved for Title I lending. Effective immediately, the Department is announcing that there will no longer be a fee for a currently approved Title I lender to become approved as a Title II 3 mortgagee, or to have its Title I branches approved for Title II lending. Lending institutions should contact the Lender Approval and Recertification Division at 202-708-3976 to obtain the appropriate application forms. No change has been made in the annual recertification fees. They remain at $150 for the lender's home office and $50 for each branch office. Quality Control Plan Requirement For the first time, all Title I lenders and loan correspondents will be required to develop and implement a Quality Control Plan covering the origination and servicing of Title I loans. To provide sufficient time for lenders to comply with this requirement, HUD' s Monitoring Division will not begin checking for Quality Control Plans until January 1, 1996. See Chapter 6 of the Handbook for the specific requirements. Distribution of the Handbook Single copies of the Handbook are being mailed to all active Title I lenders and loan correspondents. Lenders with approved branch offices will receive a bulk shipment of Handbooks equal to the number of branch offices. Additional copies of the Handbook can be obtained by calling the lender Approval and Recertification Division at 202-708-3976. For Further Information If you have any questions about this letter, please write to Director, Lender Approval and Recertification Division, 451 Seventh Street, S.W., Room 9146, Washington, D.C. 20410, or call the Division at 202-708-3976. Information on Title I and other HUD programs is now available electronically through HUDCLIPS (HUD Client Information and Policy System) on HUD's Home Page on the World Wide Web. HUD's Home Page is at http://www.hud.gov/, then select Doing Business with HUD and select HUDCLIPS. Sincerely, Nicolas P. Retsinas Assistant Secretary for Housing-Federal Housing Commissioner APPENDIX: Approved Lending Areas PRIMARY FIELD ADDITIONAL FIELD ADDITIONAL FIELD ADDITIONAL FIELD OFFICE OFFICE OFFICE OFFICE Albany, NY Buffalo, NY New York City, NY Burlington, VT Albuquerque, NM Lubbock, TX Anchorage, AK * Atlanta, GA Columbia, SC Birmingham, AL Baltimore, MD Washington, DC Wilmington, DE Richmond, VA Charleston, WV Bangor, ME Manchester, NH Burlington, VT Boston, MA Birmingham, AL Atlanta, GA Jackson, MS Nashville, TN Boise, ID Helena, MT Boston, MA Manchester, NH Providence, RI Albany, NY Buffalo, NY Albany, NY Cleveland, OH Burlington, VT Manchester, NH Albany, NY Camden, NJ Newark, NJ Philadelphia, PA Wilmington, DE Caribbean * Casper, WY Denver, CO Charleston, WV Pittsburgh, PA Richmond, VA Cincinnati, OH Baltimore, MD Chicago, IL Springfield, IL Milwaukee, WI Indianapolis, IN Cincinnati, OH Columbus, OH Indianapolis, IN Louisville, KY Cleveland, OH Columbus, OH Buffalo, NY Detroit, MI Columbia, SC Greensboro, NC Atlanta, GA Columbus, OH Cincinnati, OH Cleveland, OH Pittsburgh, PA Coral Gables, FL Tampa, FL Orlando, FL Dallas, TX Ft. Worth, TX Oklahoma City, OK Shreveport, LA Houston, TX Denver, CO Casper, WY PRIMARY FIELD ADDITIONAL FIELD ADDITIONAL FIELD ADDITIONAL FIELD OFFICE OFFICE OFFICE OFFICE Des Moines, IA Omaha, NE Sioux Falls, SD Detroit, MI Flint, MI Grand Rapids, MI Cleveland, OH Fargo, ND Minneapolis/ Sioux Falls, SD St. Paul, MN Flint, MI Grand Rapids, MI Detroit, MI Fresno, CA Los Angeles, CA San Francisco, CA Sacramento, CA Santa Ana, CA Ft. Worth, TX Dallas, TX Oklahoma City, OK San Antonio, TX Lubbock, TX Grand Rapids, MI Detroit, MI Flint, MI Greensboro, NC Richmond, VA Columbia, SC Knoxville, TN Hartford, CT Providence, RI New York City, NY Newark, NJ Helena, MT Boise, ID Honolulu, HI * Houston, TX San Antonio, TX Dallas, TX Indianapolis, IN Cincinnati, OH Springfield, IL Louisville, KY Jackson, MS New Orleans, LA Shreveport, LA Little Rock, AR Jacksonville, FL Orlando, FL Tampa, FL Kansas City, KS St. Louis, MO Omaha, NE Topeka, KS Knoxville, TN Nashville, TN Greensboro, NC Las Vegas, NV Los Angeles, CA Santa Ana, CA Phoenix, AZ Little Rock, AR Memphis, TN Jackson, MS Los Angeles, CA Santa Ana, CA San Diego, CA Fresno, CA Louisville, KY Cincinnati, OH Nashville, TN Lubbock, TX Ft. Worth, TX Albuquerque, NM Manchester, NH Burlington, VT Boston, MA Bangor, ME Memphis, TN Nashville, TN Little Rock AR Jackson, MS PRIMARY FIELD ADDITIONAL FIELD ADDITIONAL FIELD ADDITIONAL FIELD OFFICE OFFICE OFFICE OFFICE Milwaukee, WI Chicago, IL Springfield, IL Minneapolis/St. Fargo, ND Sioux Falls, SD Paul, MN Nashville, TN Knoxville, TN Memphis, TN Louisville, KY Birmingham, AL New York City, NY Hartford, CT Newark, NJ Albany, NY New Orleans, LA Jackson, MS Shreveport, LA Newark, NJ Camden, NJ New York City, NY Philadelphia, PA Oklahoma City, OK Fort Worth, TX Dallas, TX Tulsa, OK Omaha, NE Des Moines, IA Kansas City, KS Orlando, FL Jacksonville, FL Tampa, FL Philadelphia, PA Camden, NJ Pittsburgh, PA Wilmington, DE Newark, NJ Phoenix, AZ Tucson, AZ Las Vegas, NV Pittsburgh, PA Philadelphia, PA Columbus, OH Charleston, WV Portland, OR Seattle, WA Providence, RI Boston, MA Hartford, CT Reno, NV Sacramento, CA San Francisco, CA Richmond, VA Washington, DC Greensboro, NC Baltimore, MD Charleston, WV Sacramento, CA San Francisco, CA Reno, NV Fresno, CA Salt Lake City * San Diego, CA Santa Ana, CA Los Angeles, CA San Antonio, TX Houston, TX Dallas, TX Ft. Worth, TX San Francisco, CA Sacramento, CA Fresno, CA Reno, NV Santa Ana, CA San Diego, CA Los Angeles, CA Las Vegas, NV Fresno, CA Seattle, WA Portland, OR Spokane, WA PRIMARY FIELD ADDITIONAL FIELD ADDITIONAL FIELD ADDITIONAL FIELD OFFICE OFFICE OFFICE OFFICE Shreveport, LA New Orleans, LA Jackson, MS Dallas, TX Sioux Falls, ND Fargo, ND Minn./St. Paul,MN Des Moines, IA Spokane, WA Seattle, WA Springfield, IL Chicago, IL Indianapolis, IN St. Louis, MO Kansas City, KS Springfield, IL Tampa, FL Orlando, FL Coral Gables, FL Tucson, AZ Phoenix, AZ Tulsa, OK Oklahoma City, OK Washington, DC Baltimore, MD Richmond, VA Wilmington, DE Philadelphia, PA Baltimore, MD Camden, NJ * There is no extended lending area for this field office jurisdiction.