The Federal Housing Administration announced regulations Monday that will require a higher net worth from participating lenders and require mortgage brokers to seek sponsorship from approved lenders before originating loans.
The new policy, which finalizes a proposed rule issued in September, immediately requires lenders applying for FHA eligibility to have a minimum net worth of $1 million, up from the previous $250,000 requirement. Existing FHA lenders have one year to comply with the net-worth requirement. Current FHA-approved small business lenders also will have one year to meet a $500,000 minimum net-worth requirement.
The rule ends the ability of mortgage brokers to be independently approved to originate FHA loans.
Instead, FHA-approved lenders will need to sign off on their relationship with a broker. Brokers that have independent FHA approval will lose that status as of Dec. 31.
"These changes support quality mortgage lenders while excluding organizations that are ill-equipped to handle the risk associated with market variations," FHA Commissioner David Stevens said in a press release.
