HUD Final Regs Published-Effective Date 5-20-2010 for Increase of Net Worth and Elimination of HUD Loan Correspondent

Effective May 20, 2010, the Department of Housing AND Urban Development has adopted its final rule that increases the net worth requirement for FHA-approved mortgagees to $1 million and also provides for elimination of the FHA approval process for loan correspondents. Loan correspondents will no longer be approved participants in FHA programs. Loan correspondents, however, will continue to have the opportunity to participate in FHA programs as third-party originators (TPOs) through sponsorship by FHA approved mortgagees, as is currently the case, or through application to be approved as an FHA-approved mortgagee. In eliminating FHA’s approval of loan correspondents, FHA approved mortgagees assume full responsibility to ensure that a sponsored loan correspondent adheres to FHA’s loan origination and processing requirements. Finally, this final rule updates FHA’s regulations to incorporate criteria specified in the Helping Families Save Their Homes Act of 2009 (HFSH Act) designed to ensure that only entities of integrity are involved in the origination of FHA insured loans. HUD also takes the opportunity afforded by this final rule to solicit comment on whether to adopt additional net worth requirements for FHA-approved mortgagees that originate multifamily mortgages of $25 million or more.