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Washington
FHA changes net worth other rules for lenders
WASHINGTON (4/7/10)--The Federal Housing Administration (FHA) earlier this week announced that lenders that take part in FHA lending programs will need significantly higher net worth. The new FHA rule, which is effective immediately, will require “all new lender applicants for FHA programs” to “possess a minimum net worth of $1 million” within three years of the provision’s enactment. The previous minimum net worth, established in 1993, was $250,000. 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. FHA small business-approved lenders “must possess a minimum net worth of $500,000.” Multifamily lenders that also service mortgages “must have an additional 1% of total volume in excess of $25 million,” while multifamily lenders that do not service mortgages “must have an additional 0.5% of total loan volume in excess of $25 million,” according to the FHA. The FHA proposal also has the “potential to increase the number of mortgage brokers eligible to originate FHA-insured loans while providing for more effective oversight of brokers by FHA-approved lenders,” the release added. While “mortgage brokers or other third-party originators” that are previously approved by the FHA are currently permitted to originate FHA-backed loans “without sponsorship of an FHA-approved lender,” that origination authority will end in 2011. For the full FHA release, use the resource link.
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