Notice Requiring Owners with Project-Based Rental Assistance Contracts or Section 202 or 811 Project Rental Assistance Contracts to Obtain Dun and Bradstreet Numbering System (DUNS) Numbers and to Register in the Central Contractor Registration (CCR)

Notice H 2011-01-11 was issued on January 5, 2011, providing the regulatory reporting requirements and guidance for legal entities receiving federal assistance. Rental assistance payments made under Project-Based Section 8 or Section 202 or 811 Project Rental Assistance Contracts are covered under these requirements. Owners must obtain a DUNS number and have an active, valid registration in CCR within 60 days of the publication date of this Notice. An owner's failure to obtain a DUNS number and CCR registration within the timeframe allotted may result in the suspension of housing assistance payments or rental assistance payments.

The notice includes guidance for the following:

• Background on Public Law 109-282, The Federal Funding Accountability and Transparency Act of 2006
• Deadline for obtaining DUNS Numbers and Registration in CCR
• Process for Obtaining a DUNS Number and Registration in CCR
• Utilization of CCR and DUNS information

Electronic submissions of audited financial statements are due to HUD 90 days after the fiscal year end.  Entitites with a fiscal year end of 12/31/2010 are due 03/31/2011.

Mortgage Bankers/Lenders must submit their Annual Certification form and fees before starting the current year submission.

Mortgagee Letter 2011-02 "Quality Control Requirements for Direct Endorsement Lenders"

Effective immediately (released January 5, 2011)

Changes to Basic Quality Control Requirements: Beginning January 1, 2011 for loan correspondents, FHA will neither approve applications for approval nor monitor their activities for the purpose of origination of loans submitted for FHA insurance. Loan correspondents will now be referred to as Sponsored Third Party Originators.

The adoption and implementation of a Quality Control Plan is a required element of a lender's application for FHA approval. All FHA-approved mortgagees will be responsible for performing quality control review of their Sponsored Third Party Originators. The procedures used to review and monitor Sponsored Third Party Originators must be included in a mortgagee's Quality Control Plan. These procedures must include the requirements outlined in Paragraph 7-6 of HUD Handbook 4060.1, REV-2.

Review and Documentation: All FHA-approved mortgagees must have a Quality Control Plan that requires the review of loans that are originated or underwritten. For mortgagees that have Sponsored Third Party Originators, the QC Plan must require the review of loans originated and sold to the mortgagee by each of its Sponsored Third Party Originators.

Early Payment Defaults: Mortgagees must review all loans that are originated or underwritten by their company and that are originated by their Sponsored Third Party Originators that go into default within the first six payments.

Mortgagee Letter 2011-05"Revised Audited Financial Statement Reporting Requirements for Supervised Lenders in Parent-Subsidiary Structures and New Financial Reporting Requirements for Multifamily Mortgagees"

Effective immediately (released January 5, 2011)

Financial Statement Reporting Requirements for Supervised Lenders: Supervised lenders are required to electronically submit audited financial statements within 90 days of their fiscal year end as part on the annual FHA renewal process. Also, supervised lenders seeking FHA approval are now required to include audited financial statements as part of their initial application package. FHA-approved supervised lenders in parent-subsidiary structures (i.e. subsidiaries) are permitted to submit the audited consolidated financial statements of a parent company, accompanied by internally prepared consolidating schedules, if one of the following conditions is met:

1. Subsidiary accounts for at least 40% of the parent company's assets, or
2. Subsidiary provides FHA with an executed corporate guarantee agreement, acceptable to the Secretary of HUD, between it and the parent company in which the parent company guarantees the ongoing net worth and liquidity compliance of the FHA approved subsidiary.

If electing to submit audited consolidated financial statements under one of the above criteria, the fourth quarter Call Report must be attached and submitted to HUD through LASS.

The Compliance Report and Internal Control Report must be prepared and must reflect compliance with FHA's requirements at the FHA-approved subsidiary's level.

Reporting of Loan Fees for Multifamily Mortgagees: Mortgagees participating in FHA's Multifamily programs are now required to report loan fees earned that exceed 5% of the insured loan amount on each FHA-insured loan over $2,000,000. Loan fees should be reported on a separate schedule included with the Mortgagee's annual audited financial statements submitted to HUD via LASS.