TopMortgage Compliance Update (1)

November 21, 2011


FHA: Issues FAQs for Mortgagee Letters

Banging Head Let us help!
Isn't it time to bring in the professionals? 
Contact Us-1-Beveled-160

Website Forums


CFPB Forum-CC-1  

Dodd-Frank Forum-CC-1  

NMLS Users Forum-CC-1  

FHA Forum-CC-1  

Veterans Mortgage Forum-CC-134x134  


About Us-Website-LCG(160x27)-1
Contact Us-Website-LCG(160x27)-1
On November 17, 2011, the FHA Office of Lender Activities and Program Compliance issued a Frequently Asked Questions (FAQs) in response to questions asked at an Industry Conference Call on October 25, 2011. In addition, FHA also issued the accompanying slide presentation that was used during the call. The FAQs is entitled October 25, 2011 Industry Call FAQs.

Of particular interest are the FAQs regarding Mortgagee Letter 2011-34 ("Revised Lender Approval Requirements") as well as Dual Compensation and Third-Party Originators (TPOs). There is a section devoted to FAQs involving Mortgagee Letter 2011-33 ("Mortgage Record Changes and Data Reconciliation").

We are providing certain selected Questions from the FAQs.

The October 25, 2011 Industry Call FAQs document is available in our Library.Back

Mortgagee Letter 2011-34: Officers and Owners FAQs

Mortgagee Letter 2011-34: Branch Office FAQs

Dual Employment FAQs

Sponsored Third-Party Originator (TPO) FAQs

Mortgagee Letter 2011-33: Mortgage Record Change FAQs

Discussion Forum

Mortgagee Letter 2011-34: Officers and Owners FAQsML-1 
  • Which owners and officers of an FHA-approved lender must be reported to FHA?
  • Does an FHA-approved lender have to report all officers with a title of Vice President or higher to FHA?
  • Are Members of the Board of Directors a "corporate officer?"
  • Will FHA use as its definition for "corporate officer" the same definition that NMLS uses for a "control person?"
  • Are all officers with a title of Vice President a "corporate officer?"
  • Does an FHA-approved lender need to report all branch managers as "corporate officers" to FHA?
  • Must all FHA-approved lenders provide credit reports and resumes of "corporate officers" to FHA?
  • When does a lender have to report corporate officer updates to FHA?  
Mortgagee Letter 2011-34: Branch Office FAQsML-2 
  • Which origination branch offices of a lender must be registered with FHA?
  • Must taking an FHA loan application occur at a registered branch?
  • Can loan officers be outstationed?
  • What are the geographic limits for a lender's home or branch office when originating FHA loans?
  • Does FHA allow net branching?
  • What is a Direct Lending Branch and what are its registration requirements?
  • What are the FHA lender requirements for branch office facilities and staffing?
  • How does an FHA-approved lender register a new branch office?
  • How do I originate FHA loans in a State where I have a license?
Dual Employment FAQsDual   
  • Is holding a vocational/professional license in the real estate lending field equivalent to "employment"?
  • Can a manager who is also a licensed real estate broker supervise loan originators that originate FHA loans? Does it make a difference if they are actively using their license by listing or selling real estate or not?
  • Can a manager who oversees loan originators, but does not personally originate FHA loans, conduct real estate sales transactions on a part time basis if it is outside of the business of the mortgagee?
  • Can a licensed broker represent a buyer in an FHA purchase transaction and also act as the Loan Officer on that transaction if they properly disclose this information to the borrower?
  • Does the restriction on dual employment apply to non-loan officer employees of a mortgagee?
  • Does the restriction on dual employment extend to other financial services related employment such as employment at a title company, financial planning, etc.?
  • Does the restriction on dual employment apply to sponsored third-party originators being sponsored by FHA-approved lenders?
  • If a real estate agent originates an FHA loan when they are not supposed to what are the ramifications? Could they lose their real estate license and/or LO license?
Sponsored Third-Party Originator (TPO) FAQsTPO    
  • Can an FHA-approved mortgagee acting as a sponsored TPO close the loan in its name and have the Mortgage Insurance Certificate (MIC) issued in its name?
  • Can an FHA-approved mortgagee acting as a sponsored TPO close in its own name, regardless of whether it has unconditional Direct Endorsement (DE) authority?
  • If the sponsored TPO is a direct lender, does the MIC have to be issued in the name of the sponsored TPO?
  • Can an FHA-approved unconditional DE mortgagee set up a relationship with another unconditional FHA-approved mortgagee to act as a sponsored TPO in a sponsored TPO/Sponsor relationship and an authorized agent in a Principal/Authorized Agent relationship?
  • Is the "FHA-approved mortgagee acting as a sponsored TPO" category limited to those lenders currently approved by FHA?
  • FHA's "Sponsored Originator FAQs" issued after the May 12, 2011 Industry Call state an FHA-approved mortgagee acting as a sponsored TPO can close the loan in its name, but HUD Handbook 4155.2 states the loan must close in the name of the Sponsor. What is the applicable guidance?
  • What is the link for the Sponsored Originator FAQ's?
  • Can an FHA-approved mortgagee acting as a sponsored TPO access the FHA Connection to make an application for FHA Insurance on the case?
  • Can an FHA-approved mortgagee acting as a sponsored TPO access the case in the FHA Connection?
  • What is the definition of an FHA-approved mortgagee acting as a sponsored TPO?
  • Can FHA-approved lenders acting as sponsored TPOs and closing in their own name with their own funds manage the appraisal process and be shown as the lender/client on the appraisal?
Mortgagee Letter 2011-33: Mortgage Record Change FAQsML-3     
  • Is the buying or selling lender of an FHA loan required to do the record change?
  • Can the selling lender complete a record change before the loan is insured?
  • How does a lender confirm that its request for a Mortgage Record Change (MRC) has been made?
  • What does a lender do if it fails to report the record change within the 15 day deadline?
  • What does the error message "1A Case not yet endorsed: Update will be processed when endorsement received" mean?
Discussion Forum-1
Click for Forum

Law Library Image 
Click for Library
Department of Housing and Urban Development

Federal Housing Administration

Office of Lender Activities and Program Compliance

October 25, 2011 Industry Call FAQs
October 25, 2011 Industry Call FAQs - Presentation 

November 17, 2011


Lenders Compliance Group is the first full-service, mortgage risk management firm in the country, specializing exclusively in mortgage compliance and offering a full suite of hands-on and automated services in residential mortgage banking.

We are pioneers in outsourcing solutions for mortgage compliance.

Professional guidance and support to financial institutions in all areas of residential mortgage compliance, including the following:

Mortgage Compliance
Legal and Regulatory Compliance
Forensic Mortgage Services
FHA & Banking Examinations
Statutory Licensing
Information Technology & Security
Portfolio Risk Management
Quality Control
Retail, Wholesale, and Correspondent Lending Guidance
Loss Mitigation Strategies
Sarbanes-Oxley Compliance (Part 404)
Audit and Due Diligence Reviews
Portfolio Risk Management
Loan Analytics Audits
Compliance Audits
Audit and Examination Preparation
GSE Applications

This communication is sent to our valued clients and colleagues, who regularly receive our Mortgage Compliance Updates, Compliance Alerts, and Commentaries.

These publications are free to subscribers. Information contained herein is not intended to be and is not a source of legal advice.

� 2006-2011 Lenders Compliance Group, Inc. All Rights Reserved.