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  April 7, 2010
                                       FHA: Net Worth and Lender Approval
                                                Final Rules To Be Issued



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On April 5, 2010, the Federal Housing Administration (FHA) announced that it will issue regulations to increase the net worth requirements of FHA-approved lenders, strengthen lender approval criteria, and make lenders liable for the oversight of mortgage brokers.

On September 18, 2009 Commissioner David Stevens announced a set of credit policy changes that are meant to enhance FHA's risk management function, including the hiring of a Chief Risk Officer for the first time in the agency's 75-year history. In addition, Stevens announced his intent to propose new regulations to further strengthen FHA's risk management.

The final rule will be published in the next few days.

Net Worth Requirements
  • Effective one year following the enactment of this final rule:
  1. Current FHA approved lenders - with the exception of small businesses - must possess a minimum net worth of $1 million;
  2. Current FHA approved small business lenders must possess a minimum net worth of $500,000.
  • Effective three years following the enactment of this provision:
  1. Approved lenders and applicants to FHA single-family programs must have a net worth of $1 million plus 1% of total loan volume in excess of $25 million.
  2. Approved lenders and applicants to FHA multifamily programs must have a minimum net worth of $1 million.
  • Multifamily lenders that also engage in mortgage servicing must  have an additional 1% of total volume in excess of $25 million.
  • Multifamily lenders that do not perform mortgage servicing must have an additional 0.5% of total loan volume in excess of $25 million.
Streamline Lender Approval
  • While mortgage brokers will continue to be able to originate FHA-insured loans through their relationships with approved lenders, they will no longer receive independent FHA eligibility approval. Mortgage brokers or other third-party originators, already approved by FHA, will be authorized to continue to originate FHA-insured loans through the end of the calendar year without sponsorship of an FHA-approved lender. Commencing January 1, 2011, however, the origination authority will end.
 Visit our Library for Issuance     
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FHA Announces Issuance of Final Rules
(Higher Net Worth, Streamline Lender Approval)

HUD No. 10-070

April 5, 2010

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