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2. Lender Eligibility Requirements
Contents:
- a. Basic Eligibility Requirements
- b. Quality Control Plan
- c. Notification of Changes Affecting DE Approval Status
- d. Use of Mortgage Lender Staff Appraiser and Inspector
- e. Use of Mortgage Lender Staff Underwriter
- f. Exceptions to Using Staff Technicians
Change Date
Back to top2.A.2.aa. Basic Eligibility Requirements
The table below outlines the requirements that mortgage lenders must meet to be eligible for participation in the DE Lender Program.
| Requirement | Description |
|---|---|
|
Application |
A lender must apply for, and receive, basic FHA mortgage lender approval from FHA's Office of Lender Activities and Program Compliance. |
|
Lender Status |
An eligible lender must either be a
Note: A lender who is approved by FHA only as a loan correspondent is not eligible to be a DE lender, but may participate to the limited extent as described in HUD 4155.2 2.B.6. |
|
Experience |
An eligible DE mortgage lender must have
|
|
Staff Requirement |
An eligible DE mortgage lender must have on staff a full time employee to serve as underwriter. References:
|
|
Quality Control Plan |
An eligible DE mortgage lender must have a developed and implemented Quality Control Plan. Reference: For more information on quality control plans, see HUD 4155.2 2.A.2.b. |
|
Net Worth |
An eligible DE mortgage lender must have the net worth requirements prescribed in HUD 4060.1 |
2.A.2.bb. Quality Control Plan
In order to qualify for basic FHA approval, a mortgage lender must
- implement a written Quality Control Plan that
- ensures compliance with the rules, regulations, and other FHA issuances regarding mortgage loan origination and servicing, and
- is independent of the mortgage loan production function, and
- review and, when necessary, modify existing Quality Control Plans to effectively evaluate and monitor the overall quality of mortgage loans submitted for DE.
Note: Quality Control Plans do not have to name the FHA or the DE Program.
Reference: For information on the primary objectives of Quality Control Plans and suggested underwriting and servicing guidelines, see Chapter 7 of HUD 4060.1
, Rev-2 Mortgagee Approval Handbook.
2.A.2.cc. Notification of Changes Affecting DE Approval Status
Mortgage lenders must notify FHA of changes that affect DE approval status.
Reference: For information on changes that affect DE lender approval status, see HUD 4155.2 2.B.1.c.
2.A.2.dd. Use of Mortgage Lender Staff Appraiser and Inspector
The mortgage lender may use its own staff appraiser and inspector to perform appraisals and inspections, except as noted in HUD 4155.2 2.A.2.f. The table below outlines the requirements for staff appraisers and inspectors.
| Role | Requirement |
|---|---|
|
Appraiser |
Staff appraisers must be registered on FHA Roster of Appraisers to perform appraisals for FHA loans. Reference: For information on the FHA Roster of Inspectors, see HUD 4150.2 |
|
Inspector |
Staff inspectors must be registered on FHA Roster of Inspectors to perform inspections for FHA loans. Reference: For information on the FHA Roster of Inspectors, see HUD 4145.1 |
2.A.2.ee. Use of Mortgage Lender Staff Underwriter
On the same mortgage, a DE underwriter may perform the mortgage credit analysis of the borrower in addition to the full underwriting analysis of the application for the mortgage loan.
When a DE underwriter is also an appraiser on the FHA roster, that underwriter may not perform an appraisal of the property that is to be security for the mortgage loan if that underwriter will perform the mortgage credit analysis of the borrower and/or the full underwriting analysis of the application.
2.A.2.ff. Exceptions to Using Staff Technicians
A mortgage lender may originate loans, however, staff technicians may not be used, and a qualified independent fee appraiser and fee inspector from the FHA Inspector Roster must be used, for mortgage loans in which
- the borrower or seller is an employee of the mortgage lender, or
- the mortgage lender
- has provided the construction loan, or
- has a financial interest in, owns, is owned by, or affiliated with the building or selling entity or real estate firm.
Note: The FHA Inspector Roster is a list of inspectors selected by FHA as eligible to determine if the construction quality of a one- to four-unit property is acceptable as security for an FHA-insured loan.
References: For more information on loans involving a
- business relationship that may constitute a conflict of interest, see HUD 4155.2 3.B.2, and
- lender employee, see HUD 4155.2 3.B.3.
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