Types of Approved Mortgagees

HUD Handbook 4000.1 >> Types of Approved Mortgagees

Types of Approved Mortgagees

FHA approves Mortgagees as one of the following four types: Supervised, Nonsupervised, Government, or Investing.

a. Supervised Mortgagee

i. Definitions

(A) Supervised Mortgagee A Supervised Mortgagee is a financial institution that is a member of the Federal Reserve System (FRS) or whose accounts are insured by the Federal Deposit Insurance Corporation (FDIC) or the National Credit Union Administration (NCUA) (collectively, “Federal Banking Agencies”).

(B) Small Supervised Mortgagee A Small Supervised Mortgagee is a Supervised Mortgagee that has consolidated assets below the threshold for audited financial reporting established by the Federal Banking Agency with oversight of the Mortgagee. Thresholds are codified at 12 CFR ยงยง 363.1(a), 562.4(b)(2), and 715.4(c), and are subject to change.

ii. Standard

A Supervised Mortgagee must meet the general approval requirements set forth below.

iii. Activities Authorized

A Supervised Mortgagee may originate, underwrite, close, endorse, service, purchase, hold, or sell FHA-insured Mortgages.

b. Nonsupervised Mortgagee

i. Definition

A Nonsupervised Mortgagee is a lending institution that has as its principal activity the lending or investing of funds in real estate Mortgages, consumer installment notes or similar advances of credit, the purchase of consumer installment contracts, or from a directly related field. A directly related field is something directly related to the investing or lending of Mortgages, not simply actions relating to real estate in general.

ii. Standard

A Nonsupervised Mortgagee must meet the general approval requirements set forth below and:

meet FHA’s principal activity requirement by deriving at least 50 percent of its activities from real estate Mortgages, consumer installment notes or similar advances of credit, or from purchasing consumer installment contracts; have an acceptable business form; demonstrate creditworthiness; and have an acceptable funding program.

iii. Activities Authorized

A Nonsupervised Mortgagee may originate, underwrite, close, endorse, service, purchase, hold, or sell FHA-insured Mortgages.

c. Government Mortgagee

i. Definition

A Government Mortgagee is a federal, state, or municipal governmental agency, a Federal Reserve Bank, a Federal Home Loan Bank, the Federal Home Loan Mortgage Corporation (FHLMC, or Freddie Mac), or the Federal National Mortgage Association (FNMA, or Fannie Mae).

ii. Standard

A Government Mortgagee must meet the general approval requirements set forth below.

iii. Activities Authorized

A Government Mortgagee may originate, underwrite, close, endorse, service, purchase, hold, or sell FHA-insured Mortgages.

d. Investing Mortgagee

i. Definition

An Investing Mortgagee is an organization that invests funds under its own control.

ii. Standard

An Investing Mortgagee must meet the general approval requirements set forth below and:

have staff capable of managing the Mortgagee’s activities relating to its FHA-insured Mortgages;
have an acceptable business form;
demonstrate creditworthiness;
have an acceptable funding program; and
have funds invested in FHA-insured Mortgages under the Mortgagee’s direct control.

iii. Activities Authorized

An Investing Mortgagee may purchase, hold, or sell FHA-insured Mortgages. An Investing Mortgagee may only service FHA-insured Mortgages if it receives prior approval to do so on a case-by-case basis.

iv. Activities Not Authorized

An Investing Mortgagee may not originate, underwrite, or close FHA-insured Mortgages in its own name or submit applications for FHA mortgage insurance.