Non-Supervised Mortgagee (Lender/Full-Eagle)

• Non-Supervised Mortgagee is a financial institution that has as its principal activity the lending or investment of funds in real estate mortgages. It is an institution that does not meet the requirements of a Supervised Mortgagee (member of the Federal Reserve System, or insured by the Federal Deposit Insurance Corporation (FDIC), or the National Credit Union Administration (NCUA)).
• Non-Supervised Mortgagees may originate, fund, hold, service, purchase and sell FHA mortgage loans. Prior to obtaining Direct Endorsement authority, Non-Supervised Mortgagees must submit all of their FHA mortgage loans to HUD for underwriting review. Non-Supervised Mortgagees obtain Direct Endorsement authority through the FHA/HUD field office in their area. In order to obtain Direct Endorsement authority, the Non-Supervised Mortgagee must have in their employ an FHA/HUD approved underwriter and must process and underwrite a number of FHA mortgage loans under the supervision of their area field office.

Non-Supervised Mortgagee Requirements

If you do not meet one or more of the HUD requirements listed below, please contact Mortgage Consulting Services Inc. (MCSI). We will be happy to provide strategies and alternatives for meeting the requirements free of charge.

I. Business Form

A corporation, Limited Liability Company, partnership or other chartered financial institution.

Sole proprietorships are not permitted.

II. Staff

At least two or more full time employees.

A shared receptionist is permitted but cannot be used to meet this requirement.

All employees (except a shared receptionist) must be employed exclusively by the applicant.

Senior operational officer or manager of each office must have a minimum of three years experience in making and originating mortgage loans (origination experience alone is not sufficient).

III. State Licensing

Must be licensed or exempt from licensing in state where home office is located.

Must be licensed or exempt from licensing in state or states where each HUD Approved Branch Office operates.

IV. Net Worth

Must have an adjusted net worth of at least $250,000.

20 percent of net worth up to a maximum amount of $100,000 must consist of liquid assets (cash, cash equivalents or readily convertible instruments).

Must submit audited financial statements with your Non-Supervised Mortgagee application.

Audited financial statements must include a computation of adjusted net worth page.

MCSI will provide a sample of the HUD Adjusted Net Worth page needed for your audited financials as well as copies of the FHA/HUD regulations governing the computation of adjusted net worth and governing which assets are considered acceptable or unacceptable. You simply forward the sample and regulations to the CPA who prepares your audited financials and give them our phone number. MCSI will work with your CPA to insure that your audited financials meet FHA/HUD requirements.

V. Office Facilities

Must be separate and apart from any other entity.

Must be in a location conducive to mortgage lending.

Must be clearly identified to the public (signs, name listed on building directory).

Must have standard office equipment (desks, phones, fax, copy machine, etc.).

Must submit a Certification printed on company letterhead certifying that your office facilities meet FHA/HUD requirements.

MCSI will provide you with the required Facilities Certification, which tracks the language of the applicable FHA/HUD regulations. You simply print the Certification on your letterhead, sign it, and date it. MCSI will also guide you through the process of producing the additional documentation required by HUD to establish that all of the office facilities requirements are met.

VI. Sanctions

Must submit Certification printed on company letterhead certifying that your company has not been sanctioned.

MCSI will provide you with the required Sanctions Certification, which tracks the language of the applicable FHA/HUD regulations. You simply print the Certification on your letterhead, sign it, and date it.

VII. Line of Credit

Letter(s) establishing or confirming warehouse line(s) of credit of not less than $1 million (must be adequate to fund the mortgagee's average 60-day origination production pipeline).

The line of credit must be issued directly to the mortgagee.

VIII. Certificates of Insurance

Must have Fidelity Bond in the amount of at least $300,000.

Must have Errors and Omissions insurance of at least $300,000.

MCSI will provide contact information for obtaining a Fidelity Bond and Errors and Omissions insurance and will work with the insurance company to expedite issuance of the policies.

IX. Quality Control Plan

All applicants must have a written quality control plan that meets the requirements of applicable FHA/HUD regulations.

Must submit a copy of your Quality Control Plan printed on company letterhead with your application package.

MCSI will save you thousands of dollars in legal fees or consulting fees by providing you with a Quality Control Plan that meets all of the requirements of the applicable FHA/HUD regulations. Numerous companies have utilized our Quality Control Plan and have obtained FHA/HUD approval with our assistance. You simply print the Quality Control Plan on your letterhead. You will be responsible for implementing and maintaining compliance within the plan.

X. Credit/Sanctions Requirements

The mortgage company as well as its principals (officers and owners 25% or more of the company) must have acceptable credit histories.

An original business credit report must be submitted even if it indicates that the company has no credit history (fairly common, especially for newly formed entities).

The principals must submit tri-bureau credit reports, which include a search of public records. No minimum credit score is required, but outstanding past due accounts, collections, judgments, and tax liens are cause for disapproval. Similar derogatory items that occurred in the past and have been paid and/or brought current, and bankruptcies as well, can be overcome with an acceptable explanation and proper documentation; however, bankruptcies must have been discharged one or two years prior to applying for approval depending on the type of bankruptcy.

Neither the company nor the principals may have incurred license restrictions, suspensions, disbarments or similar sanctions. HUD will conduct a background search in the Mortgage Asset Resource Institute (MARI) system to verify whether any such sanctions have been incurred.

MCSI can guide you through the process of obtaining the proper documentation. We have assisted many clients draft the appropriate explanation letter necessary to appease HUD.