• A Loan Correspondent is a mortgagee meeting all of the fha qualifications, which has as it's principal activity the origination of HUD-insured mortgages for the sale or transfer to its Sponsor(s) (sponsoring lender(s)). Your must be approved by a sponsoring lender.
• In terms of FHA mortgage loans, mortgage companies that meet all of the fha qualifications and get licensed as Loan Correspondents, may only originate (no lending, servicing, etc.). All FHA mortgage loans originated by a Loan Correspondent must be underwritten and funded by a sponsoring Non-Supervised Mortgagee.

Loan Correspondent Approval Requirements

1. Business Form
   • A corporation, Limited Liability Company, partnership or other chartered financial institution.
   • Sole proprietorships are not permitted.
   
   
2. Staff
   • Must have at least two or more full time employees.
   • A shared receptionist is permitted but cannot be used to meet this requirement.
   • All employees (except a shared receptionist) must be employed exclusively by the applicant.
   • The Operational officer or manager of each office must have a minimum of three years experience in originating mortgage loans.
   
   
3. State Licensing
   • Must be licensed or exempt from licensing in state where home office is located.
   • Must be licensed or exempt from licensing in state or states where each HUD Approved Branch office operates.
   
   
4. Net Worth
   • Must have an adjusted net worth of at least $63,000, plus $25,000 for each branch office up to a maximum required net worth of $250,000.
   • 20 percent of net worth up to a maximum amount of $100,000 must consist of liquid assets (cash, cash equivalents or readily convertible instruments)
   • You Must submit audited financial statements with your Loan Correspondent application.
   • Audited financial statements must include a computation of adjusted net worth page.
   
   
5. Office Facilities
   • Must be separate and apart from any other entity.
   • Must be in a location conducive to mortgage lending.
   • Must be clearly identified to the public (signs, name listed on building directory).
   • Must have standard office equipment (desks, phones, fax, copy machine, etc.).
   • Must submit a Certification printed on company letterhead certifying that your office facilities meet FHA/HUD requirements.
   
   
6. Sanctions
   • Must submit Certification printed on company letterhead certifying that your company has not been sanctioned. Click here for an example.
   
   
7. Sponsoring Lender
   • Must have a sponsoring lender. Find a sponsoring lender.
   • The Sponsoring lender must provide a letter stating that it will fund all FHA mortgages originated by your company.

   Loan Correspondent applications are submitted to the sponsoring lender for review. After the sponsoring lender determines that the application package is complete and all requirements are met, the sponsoring lender will add the required funding letter to the application package and forward the package to the HUD Office of Lender Approval.

8. FHA Quality Control Plan
   • All applicants must have a written fha quality control plan that meets the requirements of applicable FHA/HUD regulations. Quality control resources.
   • Must submit a copy of your fha quality control plan printed on company letterhead with your application package.
   
   
9. Credit/Sanctions Requirements
   • The mortgage company as well as its principals (officers and owners 25% or more of the company) must have acceptable credit histories.
   • An original business credit report must be submitted even if it indicates that the company has no credit history (fairly common, especially for newly formed entities).
   • The principals must submit tri-bureau credit reports, which include a search of public records. No minimum credit score is required, but outstanding past due accounts, collections, judgments, and tax liens are cause for disapproval. Similar derogatory items that occurred in the past and have been paid and/or brought current, and bankruptcies as well, can be overcome with an acceptable explanation and proper documentation; however, bankruptcies must have been discharged one or two years prior to applying for approval depending on the type of bankruptcy.
   • Neither the company nor the principals may have incurred license restrictions, suspensions, disbarments or similar sanctions. HUD will conduct a background search in the Mortgage Asset Resource Institute (MARI) system to verify whether any such sanctions have been incurred.

Download the FHA Loan Correspondent Application

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