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Neighborhood Watch/Early Warning System Help
HELP TOPIC:
Mortgagee/Lending Institution Types
TERM DEFINITION:
Credit Watch The status of the origination approval agreement. Refer to Mortgagee Letter 99-15 and 10-03 for a full explanation.
Nonsupervised
Mortgagee
A HUD/FHA approved lending institution that has as its principal activity the lending or investment of funds in real estate mortgages and is not a Supervised Mortgagee, a Loan Correspondent, a Governmental Institution, a Government Sponsored Enterprise or a Public or State Housing Agency, and has not applied for approval for the limited purpose of being an Investing Mortgagee. Nonsupervised Mortgagees may be approved to originate, sell, purchase, hold, and/or service HUD/FHA insured mortgages, depending on their wishes and qualifications.
Supervised
Mortgagee
A HUD/FHA approved financial institution that is a member of the Federal Reserve System or an institution whose accounts are insured by the Federal Deposit Insurance Corporation or the National Credit Union Administration. Examples are banks, savings associations, and credit unions. Supervised Mortgagees are not required to have mortgage lending as their principal source of revenue. They may be approved to originate, sell, purchase, hold, and/or service HUD/FHA insured mortgages, depending on their wishes and qualifications. A subsidiary or an affiliate of a Supervised Mortgagee is considered to be a non-supervised Mortgagee.
Loan
Correspondent
(1) a HUD/FHA approved mortgage broker or mortgage company which, principally, originates mortgages for sale or transfer to a Sponsor or (2) a Supervised Mortgagee which applied for HUD/FHA approval as a Loan Correspondent. A non-supervised Loan Correspondent may only originate FHA mortgages and may not sell insured mortgages to any mortgagee other than an approved Sponsor. Non-supervised Loan Correspondents may not hold, purchase or service insured mortgages. A Supervised Loan Correspondent may originate FHA mortgages, hold and service insured mortgages in its own portfolio or sell insured mortgages to an approved sponsor.
Sponsor A mortgagee approved to participate in the Direct Endorsement Program which has formally established a relationship with one or more Loan Correspondents and notified HUD of the relationship. Sponsors perform the loan underwriting function on behalf of the Loan Correspondent and may close and submit the mortgage for insurance endorsement. Sponsors are required to supervise and perform quality control reviews of their Loan Correspondent(s).
Authorized Agent/  
Principal
A HUD/FHA approved mortgagee designated by another approved mortgagee (Principal) to process, underwrite or submit insurance endorsement requests in the name of and on behalf of the Principal under a Principal-Agent relationship. An approved Supervised Mortgagee, Nonsupervised Mortgagee, or Governmental Institution may designate another approved mortgagee as its Authorized Agent. At least one the parties must be approved to participate in the Direct Endorsement program. All loans originated pursuant to this relationship must be closed in the name of the Principal. Loan Correspondents and Investing Mortgagees may not utilize or be Authorized Agents.
Branch Type Traditional branch must:
  • have two or more employees
  • have adequate office space and equipment and is usually located in commercial office space
  • have separate phone lines
  • it must be in a location conducive to mortgage lending.
  • be separate from any other entity by walls or partitions (entrances and reception areas may be shared)
  • be identified to the public
  • provide privacy for conducting interviews
Non-traditional branch must:
  • have one (or more) employee(s)
  • have adequate office space and equipment and is usually located in non-commerical office space
  • have separate phone lines
  • it must be in a location conducive to mortgage lending.
  • be separate from any other entity by walls or partitions (entrances and reception areas may be shared)
  • be identified to the public
  • provide privacy for conducting interviews
Direct Lending branch:
    Is a branch that originates loans solely on a nationwide bases using the Internet and/or call center.
    This type of "direct nationwide" origination must meet all current origination and RESPA requirements.
    Typically each FHA approved Title II mortgagee or loan correspondent
  • will be limited to only one branch ID number for its direct nationwide lending operation,
  • must have a separate manager, and
  • may be co-located in an existing office or established at a new location.
FHA Approval Status FHA Approval Status - HUD/FHA approval for the lender office to originate, service, or hold FHA insured mortgages. The FHA Approval Status Codes are
  • A=Active
  • T=Terminated
  • M=Merged
    Note: FHA Approval Status is not affected by the Termination of an Origination Approval Agreement relative to HUD's Credit Watch Termination Initiative.
  • Date and File #
    of the Last Title I or Title II
    Orig. Review
    The date and file # of the last QAD Title I or Title II Origination review in ARRTS.
    Credit Watch/
    Term. Status
    Date
    The Department's regulations at 24 CFR 202.3 provides authority to place mortgagees with excessive delinquent and claim rates on Credit Watch status, in cases of more severe performance deficiencies, terminate mortgagee's loan origination approval authority.

    A credit watch termination status "P" indicates that a lender is proposed to be terminated, a "W" or a "Z" means that a lender is no longer on a proposed termination status, a "T" indicates that a lender's origination approval/underwriting authority is terminated, and a "R" means that a lender's origination approval/underwriting authority is reinstated. Lenders and the public can view only termination data, and HUD staff can view all. Those lenders whose origination approval agreement was terminated "T", and subsequently reinstated "R", can be viewed by HUD staff, Lenders and the public at http://portal.hud.gov/hudportal/documents/huddoc?id=Term_Web.pdf.

    Refer to Mortgagee Letter 99-15 for clarification of the Credit Watch Termination initiative. Effective November 1, 2001, the Department will no longer place lenders on Credit Watch status. Refer to Mortgagee Letter 01-23. Refer to Mortgagee Letter 10-03 dated January 21, 2010 for clarification of Credit Watch Termination for Direct Endorsement.
    DBA DBA is used by an FHA approved lender to indicate that it is "doing business as" another lender name in some branches. An FHA approved lender may have more than one dba, but a dba can only be associated with one lender.


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