HUD says “Hold Off” on your audited financials

(the rules are changing soon)

As proposed in a November 30, 2009, proposed rule (74 FR 62521), HUD is seeking to eliminate FHA approval for loan correspondents.  Because this rulemaking is still in process and a final rule has not yet been issued, FHA is extending the deadline for the submission of audited financial statements for loan correspondents seeking renewal of their FHA lender approval for 2010.  For loan correspondents with a fiscal year end of December 31, and that would ordinarily be required to renew their FHA approval by March 31, 2010, HUD is providing these lenders with an additional 30 days in which to submit their audited financial statements.  These loan correspondents must continue to comply with existing requirements for the submission of their Annual Certifications and renewal fees, but will be given until April 30, 2010, to submit audited financial statements.  Again, the deadline for the submission of the Annual Certification and renewal fee has not been changed.  Loan correspondents that do not complete their renewal in accordance with the deadlines as specified above will no longer be FHA-approved as of the effective date of the final rule that follows the November 30, 2009, proposed rule. 

Many loan correspondents will get caught in a timing fiasco as they won’t want to lose their ability to do FHA loans but will have to pay fees to retain the privilege.  A privilege that will be taken away from them in the near future.  Then they’ll be scrambling to find a lender to accept them into the “fold” (which may still require audited financials) in order to continue originating FHA loans.  Tough stuff.