FHA Approval
Now's the time to become FHA approved!
Obtaining FHA approval takes some initial legwork and money, but it’s an investment well worth it. With the scarcity of loan products available to meet the needs of moderate income and credit-challenged borrowers, FHA may be a viable alternative source of financing.
Direct Mortgage offers FHA loans for both purchase and refinance, fixed or ARM. If you are already FHA approved, we encourage you to consider FHA loans for your borrowers and to apply for Direct Mortgage additional sponsorship. If you are not yet approved, please submit an application to us for original sponsorship.
To apply for sponsorship, you’ll need to gather certain documents (see list below), fill out an application (HUD 11701) and application fee form and send it all to Direct Mortgage (attn: FHA Sponsorship) along with your $1,000 application fee. We will review the material and forward it to HUD together with a sponsor cover letter.
The process may take 5 to 7 weeks not including mailing time.
Required Documents:
- Sponsor cover letter – Direct Mortgage provides
- Fee - $1000
- Application Form
- Credit Reports – complete originals
- Resumes
- Financial statements (Audited)
- Licenses
- State DBA approval – if DBA is used
- Facilities evidence
- Quality Control Plan
- Funding program
- Sanctions letter
- Partnerships, LLCs, and Not-for-profits require additional documentation
- Explanation of Documents — Note that brokers working with us will usually be considered non-supervised loan correspondents
The application should be sent to:
Direct Mortgage Wholesale
Attn: FHA Sponsorship
6955 S Union Park Center, Suite 540
Salt Lake City, Utah 84047
Summary of Requirements:
Here is a summary of requirements to become FHA approved taken from the FHA Title II Mortgagee Approval Handbook 4060.1. Detailed requirements and instructions can be found within this handbook.
- must be a corporation, partnership, or other chartered institution, and must be a permanent organization having succession. A sole proprietorship or trust is not an acceptable business form for approval as a FHA mortgagee.
- must obtain all required business licenses prior to, or in conjunction with, approval as a FHA mortgagee. Except for a supervised mortgagee, copies of all required licenses must be submitted with the application. A state-licensed mortgagee must also submit a letter certifying to the Department that it has not been refused a license or sanctioned.
- must submit documentation that they have State approval for both their legal name and any “doing business as” name they use.
- must have and maintain an adjusted net worth of at least $63,000, plus $25,000 for
each registered branch office up to a maximum required adjusted net worth of
$250,000. . . . All calculations must be prepared by a CPA pursuant to chapter 7 of the
most recent version of HUD IG Handbook 2000.04
- must maintain liquid assets of 20 percent of its adjusted net worth or $100,000
whichever is lesser.
- must pay all its own operating expenses
- must employ trained personnel that are competent to perform their assigned responsibilities.
- must have sufficient staff or permitted contractor support for loan origination, processing, underwriting, servicing, and collection activities, to the extent that the mortgagee engages in these activities.
- may contract out certain administrative and clerical functions that do not materially affect underwriting decisions or increase the risk to FHA.
- home office and each branch office must be able to provide prompt responses to applicant or mortgagor inquiries
- “must comply with the Fair Housing Act, Executive Order 11063 on Equal Opportunity in Housing, the Equal Credit Opportunity Act (ECOA), the Real Estate Settlement Procedures Act (RESPA), the Home Mortgage Disclosure Act (HMDA), and all other Federal laws relating to the lending or investing of funds in real estate mortgages.
- must follow all applicable statutes, regulations and HUD written instructions, including program handbooks and mortgagee letters on loan originations
- may not use mortgagor escrow funds for any purpose other than for which they were received.
- may not pay any fee, kickback, compensation or thing of value (including a fee representing all or part of the mortgagee’s origination fee) to any person or entity in connection with a FHA insured mortgage transaction, except for services actually performed and permitted by the Department.
- must spend a majority of its time and assets in the production of real estate mortgages and in the lending or investment of funds in real estate mortgages, or a directly related field.
- required to have at least one qualified sponsor at all times.
If you would like more information about FHA loans or the approval process, call Direct Mortgage at 800.924.3884.
Learn more about FHA loans.
Learn the benefits of FHA loans.
View a list of our FHA and other loan programs.
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