This section of the FHA Single Family Housing Policy Handbook relates to post-approval operations. All guidelines shown below take effect on September 14, 2015, unless otherwise noted.
a. Operating Requirements and Restrictions
A Mortgagee must comply with the following operating requirements and restrictions for its FHA business operations in addition to continuing to operate in full compliance with the eligibility requirements outlined in this SF Handbook.
b. Providing Information to FHA
Once approved, a Mortgagee must provide the following information to FHA using LEAP.
i. Addresses for Correspondence
The Mortgagee must provide the following office addresses:
- Mailing – address of home office
- Geographic – street address(es) where its home and branch offices are physically located
- Administrative – street address to which HUD administrative notices from the HOC Quality Assurance and Processing and Underwriting Divisions, Office of Lender Activities and Program Compliance, Mortgagee Review Board (MRB), Office of General Counsel, and Office of Inspector General (OIG) are sent, including requests and/or demands for indemnification
- Premium – address to which FHA insurance premium correspondence is sent
- Payee – address to which FHA claim correspondence is sent
- Servicing – street address for each servicing office. Mortgagees must indicate which servicing functions (general, escrow administration, delinquency/loss mitigation, foreclosure and Quality Control) are performed at each location
- Computerized Homes Underwriting Management System (CHUMS) – address to which FHA originating, underwriting, endorsing, and closing correspondence is sent
- Endorsement – address to which all FHA mortgage endorsement correspondence is sent, including the Mortgage Insurance Certificate (MIC)
ii. Point of Contact
The Mortgagee must provide a primary administrative contact and an associated email address. The administrative contact is the point of contact associated with the Mortgagee’s administrative address, and is the primary contact for all interaction between the Mortgagee and FHA. All HUD administrative notices from the HOC Quality Assurance and Processing and Underwriting Divisions, Office of Lender Activities and Program Compliance, MRB, Office of General Counsel, and OIG will be sent to the administrative contact, including requests and/or demands for indemnification.
Point of contact information is optional for all other addresses listed above.
iii. All Other Contact and Identification Information
The Mortgagee must provide all other required contact and identification information requested in LEAP, including phone, fax, email, and NMLS ID.
iv. Branch Office Information
For each registered branch office, the Mortgagee must provide the branch’s address, phone number, email address, DBA name, and branch and regional managers.
v. Principal/Authorized Agent Relationships
The Mortgagee must identify its principal/authorized agent relationships.
vi. Cash Flow Accounts
The Mortgagee must use the Cash Flow Account Setup function in LEAP to provide its bank account information for the following payment types:
- Title I, Single Family Upfront Premiums
- Title I, Single Family (Periodic) Annual Premiums
- Title II, Single Family Upfront Premiums
- Title II, Single Family (Periodic) Monthly Premiums
- Title II, Single Family Claim Remittance Amounts
c. Compliance with Law
The Mortgagee must ensure that its operations are compliant with all applicable federal, state, and local laws.
d. Servicing of FHA-Insured Mortgages
The servicing of FHA-insured Mortgages must be performed by FHA-approved Mortgagees. FHA-approved Mortgagees that use a subservicer to service FHA-insured Mortgages must ensure the subservicer is also approved by FHA to service FHA-insured Mortgages. The servicing Mortgagee is responsible for the actions of their subservicers.
The costs associated with subservicing may not be imposed on the FHA Borrower or passed along to HUD in a claim for mortgage insurance benefits.
e. Employee Compensation
The Mortgagee must ensure its employees continue to be compensated in accordance with the requirements for FHA approval.
The Mortgagee may not compensate an employee for participation in an FHA-insured transaction if the employee will receive other compensation related to the transaction.
f. Conflicts of Interest
The Mortgagee may not permit an employee to have multiple roles in a single FHA-insured transaction. Employees are prohibited from having multiple sources of compensation, either directly or indirectly, from a single FHA-insured transaction.
g. Payment of Operating Expenses
Operating Expenses are the costs associated with equipment, furniture, office rent, overhead, employee compensation, etc.
The Mortgagee must pay all of its own operating expenses, including the expenses of its home office and any branch offices where it conducts FHA business.
The Mortgagee must maintain all accounts for operating expenses in its name.
h. Prohibited Payments
The Mortgagee, or any of the Mortgagee’s employees, must not pay or receive, or permit any other party involved in an FHA-insured mortgage transaction to pay or receive, any fee, kickback, compensation or thing of value to any person or Entity in connection with an FHA-insured mortgage transaction, except for services actually performed and permitted by HUD. The Mortgagee must not pay a referral fee to any person or Entity. The Mortgagee is not permitted to:
- advance funds to a real estate agent, real estate broker, mortgage broker, or packager as an advance of anticipated commissions on sales to be financed with an FHA-insured Mortgage to be provided by the Mortgagee;
- make low interest or no interest Mortgages to a real estate broker, real estate agent, mortgage broker, packager, builder or any other party from whom the Mortgagee accepts proposals involving FHA-insured Mortgages; or
- pay a gratuity or make a gift valued above items that are customarily distributed in the normal course of advertising, public relations, or as a general promotion device, to any person or Entity involved in the Mortgagee’s FHA-insured mortgage transactions.
The Mortgagee must employ sufficient, experienced staff or engage, as permitted, the contract support necessary to carry out the Mortgagee’s FHA business.
The Mortgagee is responsible for the actions of its staff that participate in FHA transactions. The Mortgagee must ensure that its Corporate Officers exercise control over the management and supervision of such staff, which must include regular and ongoing reviews of staff performance and of the work performed.
The Mortgagee is responsible for ensuring compliance with the licensing and registration requirements applicable to individual loan originators under the SAFE Act.
j. Use of Contractors
i. Permissible Use
Provided the Mortgagee ensures that the contracting out of certain functions does not and will not materially affect underwriting or servicing decisions or otherwise increase financial risk to FHA, the Mortgagee may use contract support for administrative and clerical functions that include:
- clerical assistance;
- mortgage processing (typing of mortgage documents, mailing and collecting verification forms, ordering credit reports, and/or preparing for endorsement and shipping Mortgages to the Purchasing Mortgagee);
- ministerial tasks in mortgage servicing (processing of a foreclosure action, preservation and protection, and/or tax services);
- legal functions; and
- Quality Control.
The Mortgagee remains responsible for the quality of its FHA-insured Mortgages and must ensure that its contractors fully comply with all applicable laws and FHA requirements.
The Mortgagee and its QC contractor must have a valid contractual agreement in place that specifies the roles and responsibilities of each party.
The Mortgagee may own or have an ownership interest in a separate business Entity that offers such contract services.
ii. Impermissible Use
The functions listed above may not be contracted out to sponsored TPOs, real estate brokers, or other similar Entities.
The Mortgagee may not contract with any Entity or person that is suspended, debarred, under a Limited Denial of Participation (LDP), or who is otherwise excluded from participation in FHA transactions.
A Mortgagee must not contract out management or underwriting functions.
Affiliates are contractors, agents, vendors, subservicers, and sponsored TPOs who participate in FHA programs on behalf of an FHA-approved Mortgagee.
The Mortgagee must ensure that its Affiliates are eligible and properly trained to participate in FHA programs.
The Mortgagee must ensure that each Affiliate of the Mortgagee adheres to FHA requirements when performing activities related to that Mortgagee’s FHA business.
l. Branch Office Requirements
All branch offices must meet FHA’s staffing, office facilities, and operating requirements, and all applicable licensing requirements.
m. Fair Housing Notice
The Mortgagee must prominently display a fair housing poster at each office that participates in activities related to Residential Real Estate-Related Transactions so as to be readily apparent to all persons seeking residential real estate or brokerage services. The Mortgagee must prominently display the Equal Housing Opportunity logo on documents, including both hard copy and electronic documents, distributed by the Mortgagee to the public.
Advertising is any communication made to an outside Entity or individual that describes or calls attention to a Mortgagee’s FHA products or services.
(B) Advertising Device
An Advertising Device is a channel or instrument used to solicit, promote, or advertise FHA products or programs. Advertising Devices are present in the entire range of electronic and print media utilized by Mortgagees, including, but not limited to, websites, website addresses, business names, aliases, DBA names, domain names, email addresses, direct mail advertisements, solicitations, promotional materials and correspondence.
A Mortgagee is solely responsible for the content of its advertising. This includes advertising abuses by employees of the approved Mortgagee, and any violations committed by employees of Affiliates or companies that advertise or generate FHA mortgage leads or other FHA business on behalf of the Mortgagee. The Mortgagee must ensure that all of its advertising communications and Advertising Devices, and the communications and Advertising Devices of its Affiliates, comply with all applicable state licensing and regulatory requirements.
(B) Advertising Device
A Mortgagee must not create the false impression that any of its Advertising Devices are official government forms, notices, or documents or that otherwise convey the false impression that an Advertising Device is authored, approved, or endorsed by HUD or FHA. The Advertising Device must be written, formatted, and structured in a manner that clearly identifies the Mortgagee as the sole author and originator of the Advertising Device. The Advertising Device must reflect the Mortgagee’s name, location, and appropriate contact information.
(1) HUD and FHA Names and Acronyms
The use of the words “federal,” “government,” “national,” “U.S. Department of Housing and Urban Development,” “Federal Housing Administration,” and/or the letters “HUD” or “FHA,” either alone or with other words or letters, by an FHA-approved Mortgagee, non-approved Mortgagee, or sponsored TPO in a manner that falsely represents that the Mortgagee’s business services or products originate from HUD, FHA, the government of the United States, or any federal, state or local government agency is strictly prohibited.
(2) HUD and FHA Logos and Seals
Other than permissible use of the official FHA-Approved Lending Institution logo and the Equal Housing Opportunity logo, a Mortgagee must not use FHA or HUD logos or seals, any other official seal or logo of the U.S. Department of Housing and Urban Development, or any other insignia that imitates an official federal seal. No person, party, company, or firm, including FHA-approved Mortgagees, may use these logos or seals on any Advertising Device
(a) FHA-Approved Lending Institution Logo User Restrictions
Only an FHA-approved Mortgagee may display the official FHA-Approved Lending Institution logo on an Advertising Device for the purpose of illustrating to the public the fact that the Mortgagee originates FHA-insured mortgage products. The Mortgagee must not permit its sponsored TPOs to use the official FHA-Approved Lending Institution logo on any Advertising Device; unless the sponsored TPO is also an FHA-approved Mortgagee.
(b) FHA-Approved Lending Institution Logo Content Restrictions
The FHA-Approved Lending Institution logo must be displayed in a discreet manner. The Advertising Device, when taken as a whole, must emphasize the institution or DBA name of the Mortgagee, and not the federal government. When using the FHA-Approved Lending Institution logo on an Advertising Device, the Mortgagee must include a conspicuous disclaimer that clearly informs the public that the Mortgagee displaying the Advertising Device is not acting on behalf of or at the direction of HUD, FHA, or the federal government. The disclaimer must be prominently displayed in a location proximate to where the FHA-Approved Lending Institution logo is displayed on each Advertising Device. The Mortgagee may not alter or modify the FHA-Approved Lending Institution logo in any way.
(3) Advertising Devices of Sponsored Third-Party Originators Advertising
Devices used by sponsored TPOs must reflect the sponsored TPO’s name, location, and appropriate contact information. Sponsored TPOs are prohibited from engaging in any activity or authoring or distributing any Advertising Device that falsely advertises, represents, or otherwise conveys the impression that the sponsored TPO’s business operations, products, or services either originate from or are expressly endorsed by HUD, FHA, the government of the United States, or any federal, state or local government agency.
iii. Required Documentation
The Mortgagee must retain copies of any Advertising Device it produces that is related to FHA programs for a period of two years from the date that the Advertising Device is circulated or used for advertisement, educational, or promotional purposes. Copies of Advertising Devices related to FHA programs may be kept in either electronic or print format and are to be provided to HUD upon request.