Annual Recertification

HUD Handbook 4000.1 >> Annual Recertification

This section of the FHA Single Family Housing Policy Handbook (HUD Handbook 4000.1) deals with the annual recertification process for mortgagees who participate in the FHA loan program. The following information was adapted from HUD Handbook 4000.1 and is effective September 14, 2015.

a. General Requirements

i. Standard

(A) Recertification Process To retain its FHA approval, a Mortgagee must, unless otherwise noted, complete FHA’s recertification process on an annual basis.

(B) Filing Deadline Each Mortgagee must submit its recertification package within 90 Days after the Mortgagee’s fiscal year end.

ii. Required Documentation

The Mortgagee must submit its annual recertification package through LEAP. The Mortgagee must submit the following to recertify its FHA approval:

  • online certification
  • recertification fee
  • financial data

A Mortgagee that does not wish to retain its FHA approval must submit a request for voluntary withdrawal of FHA approval.

iii. Exception for Recently Approved Mortgagees

(A) Standard Mortgagees approved using financial statements that covered a time period ending within the six months before approval are not required to submit a recertification package after the close of that fiscal year.

(B) Required Documentation At the close of the first, full fiscal year following receipt of FHA approval, the Mortgagee must submit audited financial statements covering the period from the ending date of the financial statements used to obtain initial approval, and ending at the close of the Mortgagee’s most recent fiscal year. Mortgagees may not submit financial statements that cover a period of more than 18 months.

b. Online Certification

i. Standard

The Mortgagee, through a Corporate Officer, must complete a series of annual certification statements that address the Mortgagee’s compliance with FHA requirements over the Certification Period. The Certification Period is the one-year period beginning on the first day of the Mortgagee’s prior fiscal year and ending on the last calendar day thereof.

ii. Required Documentation

The certification must be completed through LEAP by a Corporate Officer of the Mortgagee who has been granted the Certifying Official authorization in FHAC.

iii. Unable to Certify

(A) Standard If a Mortgagee is unable to truthfully certify to one or more of the statements set forth in the online certification, the Mortgagee must not make the particular certification.

(B) Required Documentation The Mortgagee must submit an explanation for each certification that it is unable to complete. The Mortgagee may submit supporting documentation with its explanation. If additional information is required as a result of the Mortgagee’s explanation, FHA will advise what additional information or documentation is required and provide a due date for the submission of the requested information or documentation.

(C) FHA Review FHA will review the Mortgagee’s explanation and communicate to the Mortgagee any additional information or documentation needed to render a final decision regarding the Mortgagee’s ability to complete the annual recertification process.

iv. Repercussion of False Certification

If a Mortgagee submits a false certification to FHA, the Mortgagee and its certifying Corporate Officer may be referred for criminal, civil, or administrative actions, as appropriate.

c. Annual Recertification Fee

i. Standard

The Mortgagee must pay an annual recertification fee after its online certification has been submitted and accepted. All fee payments must be made electronically. This recertification fee is non-refundable and will not be prorated.

ii. Calculation of Fee Amount

The Mortgagee will be assessed a fee for the Mortgagee’s home office and for each branch office registered with FHA. Fees are calculated based on the Mortgagee’s program approval(s), Mortgagee type, and the number of FHA-approved branch offices as of the last business day of the Mortgagee’s annual reporting period.

A Mortgagee that is terminating a branch office must do so on or before the last business day of the annual reporting period in order to avoid paying the recertification fee for that branch office for the next annual period. Mortgagees attempting to terminate a branch office after the last day of their annual reporting period will not be permitted to do so until the annual recertification fees have been paid in full.

iii. Exception for Government Mortgagees

Government Mortgagees are not required to pay a recertification fee.

d. Financial Data Submission

Supervised, Nonsupervised, and Investing Mortgagees must submit the financial data described below.

i. Small Supervised Mortgagees

A Small Supervised Mortgagee must submit a copy of its Unaudited Regulatory Report, signed by a Corporate Officer, that aligns with its fiscal year end.

ii. Supervised, Nonsupervised, and Investing Mortgagees

(A) Audit of Financial Statements The Mortgagee must comply with the appropriate financial reporting procedures and requirements set forth in the HUD OIG Handbook 2000.04, Consolidated Audit Guide for Audits of HUD Programs.

(B) Accounting and Auditing Standards The Mortgagee must have prepared its financial statements in accordance with GAAP and had its audit performed in accordance with the most currently effective Government Accountability Office Generally Accepted Government Auditing Standards (GAGAS), also referred to as the “Yellow Book,” and GAAS.

(C) Audit Related Questions The Mortgagee must submit answers to FHA’s Audit Related Questions. FHA’s Audit Related Questions address information about the Mortgagee’s financial data, the type of audit completed, and any Findings reported.

(D) Independent Public Accountant Attestation The Mortgagee must submit its recertification package to an Independent Public Accountant (IPA) for review. The IPA must review the Mortgagee’s financial data and Audit Related Questions, and complete the Agreed Upon Procedures. The Agreed Upon Procedures address compliance with required audit procedures.

iii. Exception for Government Mortgagees

Government Mortgagees are not required to submit financial information.

e. Rejection of a Mortgagee’s Recertification Package

FHA may reject a Mortgagee’s recertification package due to noncompliance. When this occurs, the Mortgagee must resubmit its financial data, and if applicable, the answers to FHA’s Audit Related Questions along with an updated IPA attestation. All documents needed to cure deficiencies in the Mortgagee’s recertification package must be submitted through LEAP.

f. Recertification Extension Requests

The Mortgagee may request an extension of its recertification package due date. Extension requests must be submitted through LEAP at least 45 Days prior to the Mortgagee’s recertification package due date.

g. Failure to Recertify

A Mortgagee may be referred to the MRB for failing to timely and satisfactorily complete the annual recertification process.