Become an FHA Approved Mortgage Broker

Homebuyers who are looking to quickly gain equity in today's housing market are looking for loan products that require very little money down, and United States Federal Housing Administration (FHA) loans fit the bill. To become an FHA approved mortgage broker and break into an entirely new income stream within the mortgage industry, first take a few steps to properly research and prepare yourself to meet strict FHA requirements for mortgage brokers, which the FHA refers to as loan correspondents. You'll need to make sure you meet all the requirements to become an FHA approved mortgage broker, and then you'll need to provide proof to the FHA.

Steps

  1. Provide proof that you are a mortgage broker, licensed in your state. You'll need to provide a copy of your current license to the FHA in the loan correspondent application package.
  2. Update your company's financials. You'll need a certified audit report that's less than a year old, showing an adjusted net worth of at least $63,000, 20 percent of which must be liquid assets.
  3. Provide an original Residential Mortgage Credit Report for each senior officer – or anyone who owns 25 percent or more – of your company, as well as an original Business Credit Report or Dunn & Bradstreet on yourself.
  4. Detail at least 3 years' loan origination experience in your resume. The FHA application packet should include a copy of your resume.
  5. Check on physical location and staffing requirements for FHA approval. Your facilities and human resources need to meet certain requirements for the FHA to approve you as a loan correspondent:
    • You can share a lobby or reception area with another business, but you have to maintain separate offices that are dedicated only to your business.
    • You must identify your company with a permanent sign that is readily visible to the public.
    • Your company must include at least 2 or more employees who work full-time, and although you can share a receptionist with another company, that person won't count toward your 2-person total.
    • Every company employee needs to be paid on the up-and-up, using a lender's FHA business W-2. They also can't work anywhere else in the mortgage or real estate industry, or anywhere else that might give the appearance of, or present an actual, conflict of interest where mortgage applicants' rights are concerned.
  6. Secure a Housing and Urban Development (HUD)-approved direct endorsement mortgagee as your company's sponsor and lender, and you will need to provide a letter from your sponsor/lender requesting your approval as an FHA loan correspondent.
  7. Locate and copy for the FHA packet any and all forms pertinent to your state DBA approval, LLC designation and partnership agreements.
  8. Develop and submit a quality control plan. You may want to approach a broker who has already gone through the FHA approval process and ask to see their plan to get an idea of what to include in your own. Basically, a quality control plan should provide a procedural outline of every step of your company's process, whether outsourced or completed in-house. FHA approval depends upon a quality control plan that assures timely, consistent and reliable servicing of FHA mortgage loan applications.
  9. Prepare a check for the $1,000 application fee, and make copies. The copy of the check should be submitted with the application packet, but send the payment and fee cover sheet to the appropriate address – not with the application packet.
  10. Prepare Application Form 11701 and submit your complete packet for approval (after making a copy for yourself).



Tips

  • Only LLCs, corporations, partnerships, chartered financial institutions and government agencies qualify to become an FHA approved mortgage broker or loan correspondent. If you're in a sole proprietorship, you won't be approved.

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