The Office of the Assistant Secretary for Housing – Federal Housing Commissioner has issued a final rule to amend the Department of Housing and Urban Development’s (“HUD”) requirement for branch office registration. The final rule removes the requirement under 24 CFR 202.5(k) that a lender or mortgagee must register each branch office where they conduct FHA business with HUD.
HUD previously asked for public comments on a proposed rule titled “Changes in Branch Office Registration Requirements” which was published in the Federal Register on March 1, 2023. HUD now adopts that rule without change, with an effective date of March 4, 2024.
As of the effective date, HUD is eliminating the requirement that a lender or mortgagee must register all branch offices authorized to originate Title I or Title II loans. Instead, lenders and mortgagees will have the option to select which offices to register and maintain as branch offices with HUD. Those branch offices will be placed on HUD’s Lender List Search page.
The final rule also revises 24 CFR 202.5(i) by making annual fees and certification applicable only to branch offices registered with HUD rather than basing fees on each branch office that is authorized to conduct FHA business.
HUD states that the revisions are intended to “reduce the administrative burden for existing lenders and mortgagees and eliminate barriers for entities interested in FHA programs.” Technological advancements in the mortgage industry are also discussed as a reason why the registration requirement may no longer be necessary.
In addition, HUD clarifies that the change to registration requirements will not affect the agency’s monitoring and oversight of lenders and mortgagees, who will remain responsible to HUD for the actions of branch offices employees.
As a follow up, HUD published FHA INFO 2024-02 on February 15, 2024, with Frequently Asked Questions (“FAQs”) to answer stakeholder inquiries received since the February 2, 2024 publication date of the final rule. The most asked question has been whether the new branch office registration rule affects lender approval recertifications for lenders and mortgagees whose fiscal year ended on December 31, 2023, and are required to recertify by March 31, 2024. The FAQs provides that the final rule is not applicable to those lenders and mortgagees as their recertification fees will be calculated based on the number of registered branch offices as of the last business day of their fiscal year-end certification period in 2023.
