Increasing the Net Worth Requirements for FHA-Approved Mortgagees.
HUD proposed to increase the net worth requirements for current FHA-approved mortgagees, including investing mortgagees, and applicants seeking FHA approval as mortgagees from $250,000 to $2.5 million over a period of 3 years.
The proposed rule provided that within one year of the effective date of the final rule, which would follow the November 30, 2009, proposed rule, supervised and non-supervised mortgagees and investing mortgagees would be required to have a minimum net worth of $1 million, of which at least 20 percent must be liquid assets consisting of cash or its equivalent acceptable to the Secretary.
Mortgagees would be required to comply with the minimum net worth requirement of $2.5 million within 3 years of the effective date of the final rule, with at least 20 percent of such net worth consisting of liquid assets.
In proposing to increase the net worth requirements of approved mortgagees, the November 30,
2009, proposed rule noted that the net worth requirements of FHA-approved mortgagees had not been increased since 1993.
HUD advised that the increases were not only necessary adjustments for inflation, but would help ensure that FHA-approved mortgage lenders, including investing mortgagees, are sufficiently capitalized to meet the potential needs associated with the financial services they provide.
Net Worth Requirements for Applicants for Approval to Participate in FHA Single Family or Multifamily Programs and FHA-Approved Mortgagees: 2013 and After
The following net worth requirements are effective on [insert date three years from effective
date of final rule], for new applicants for FHA approval to participate in FHA single-family or
multifamily programs, for all approved supervised and nonsupervised lenders and mortgagees, and for all FHA-approved investing lenders and mortgagees:
- • Single Family Mortgagees. Irrespective of size, all FHA-approved mortgagees and applicants
for approval to participate in FHA single family programs shall have a net worth of $1 million,
plus an additional net worth of one percent of the total volume in excess of $25 million of FHA
single family insured mortgages originated, underwritten, purchased, or serviced during the
prior fiscal year, up to a maximum required net worth of $2.5 million. No less than 20 percent
of the mortgagee’s required net worth must be liquid assets consisting of cash or its equivalent
acceptable to the Secretary.
- • Multifamily Mortgagees. Irrespective of size, all existing FHA-approved mortgagees and
applicants for approval to participate in FHA multifamily programs shall have a minimum net
worth of $1 million. For those multifamily mortgagees that also engage in multifamily
mortgage servicing, an additional net worth of one percent of the total volume in excess of $25
million of FHA multifamily mortgages originated, purchased, or serviced during the prior fiscal
year, up to a maximum required net worth of $2.5 million, is required.
For multifamily mortgagees that do not perform multifamily mortgage servicing, an additional net worth of one half of one percent of the total volume in excess of $25 million of FHA multifamily mortgages originated during the prior fiscal year, up to a maximum required net worth of $2.5 million, is required.
No less than 20 percent of the mortgagee’s required net worth must be liquid assets consisting of cash or its equivalent acceptable to the Secretary.
• Single Family and Multifamily Mortgagees.
Irrespective of size, all existing FHA-approved mortgagees and applicants for approval to participate in both FHA single family and multifamily programs must meet the net worth requirements for a single family mortgagee.
Therefore, if a mortgagee is a participant in both the multifamily and single family programs, it
is required to meet the greater net worth requirements for single family mortgagees.
