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From: OLA@hud.gov on behalf of recert@hud.gov
Subject: Interim reporting requirements for small supervised lenders
The purpose of this email is to advise lenders and mortgagees of recently implemented interim changes in the annual audit reporting requirements for small supervised lenders and mortgagees. These changes do not impact the annual audit reporting requirements for any other mortgagees or lenders, including supervised lenders and mortgagees with more than $500 million in total assets.
The interim audit reporting requirements outlined below supersede the annual audit reporting requirements set forth in Mortgagee Letter 2011-25 (ML 11-25) for small supervised lenders and mortgagees and advise these lenders and mortgagees of interim annual audit reporting requirements. ML 11-25 advised small supervised lenders and mortgagees with consolidated assets below the audited financial reporting thresholds set by federal regulators at 12 C.F.R. § 363.1(a) for the Federal Deposit Insurance Corporation (FDIC), 12 C.F.R. § 562.4(b)(2) for the Office of Comptroller of Currency (OCC) formerly Office of Thrift Supervision, and 12 C.F.R. § 715.4(c) for the National Credit Union Administration (NCUA) of the Federal Housing Administration's (FHA) requirements regarding the submission of audited financial statements as a condition for FHA lender approval and recertification. The current threshold is $500 million in total assets.
FHA is aware of the confusion surrounding the provisions in ML 11-25 applicable to small supervised lenders and mortgagees in light of FHA's waiver of the submission of audited financial statements and with difficulties encountered by these entities in complying with the provisions of ML 11-25 where their respective regulatory agencies (i.e. FDIC, OCC, or the NCUA) also do not require submission of audited financial statements. As a result, FHA is rescinding the provisions of ML 11-25 as applied to these small supervised lenders and mortgagees.
For annual recertification, small supervised lenders and mortgagees must submit a copy of their unaudited regulatory report that aligns with their fiscal year end (i.e., Report of Condition and Income, also known as the 'Call Report' on Federal Financial Institutions Examination Council forms 031 and 041, a consolidated or fourth quarter Thrift Financial Report, or a consolidated or fourth quarter NCUA Call Report, submitted on NCUA Form 5300 or 5310). The unaudited regulatory report must be signed by a corporate officer.
The waiver of 24 CFR § 202.5 (g): Elimination of Requirement that Audited Financial Statements be Submitted as a Condition for FHA Lender Approval or Renewal for Small Supervised Lenders and Mortgagees with less than $500 Million in Assets, is extended through April 7, 2013. Until further guidance is issued, small supervised lenders and mortgagees will not be required to submit a report on internal controls as it relates to administering HUD-assisted programs or a report on compliance with specific requirements applicable to major and non-major HUD programs.
Small supervised lenders and mortgagees should not submit their annual recertification documentation through the Lender Approval and Assessment Subsystem (LASS). Instead, the information should be e-mailed to small.supervised.lenders@hud.gov.
If you do not wish to renew your FHA lender approval, you may submit a request to voluntarily withdraw your approval. This option is explain in paragraph 6-25 of the Title II Mortgagee Approval Handbook 4060.1 and in paragraph 7-9 of the Title I Lender Approval Handbook 4700.2. The letter requesting voluntary withdrawal should be e-mailed to withdrawals@hud.gov.
The Department values your participation in its insured mortgage programs. If you have any questions or concerns regarding this letter, please call 202-755-7400 or email LASS@hud.gov.
Volky A. Garcia
Director
Lender Approval and Recertification Division | 
