Net branching is not the solution for closing FHA

It has become very common for mortgage brokers who are not FHA approved to sign up with a "net branch" company that is FHA approved. Working for a HUD approved mortgage banker, licensed in multiple states, I get these requests all the time. I am more than willing on bringing well qualified loan officers on board as w2 employees, but I make very clear that all loans must be closed with Artisan Mortgage. This usually upsets the brokers since they would prefer close their FHA deals with me and still maintain their broker license for all additional business. The broker usually insists that HUD's policy regarding dual employment only prohibits brokers from working for 2 HUD approved entities. In fact, there are numerous bankers and brokers recruiting loan officers under this false assumption that dual employment is okay.

In order to clear things up, I have copied directly from HUD Handbook 4160 chapter 2 section g, which outlines clearly HUD's dual employment policy.

G. Full Time, Part Time and Outside Employment. (TOP) A mortgagee may employ staff full time or part-time (less than the normal 40 hour work week). They may have other employment including self-employment. However, such outside employment may not be in mortgage lending, real estate, or a related field. Direct endorsement underwriters are included in this provision. An underwriter may not work on a part-time basis for any other mortgagee, even underwriting conventional mortgage loans. An underwriter may not underwrite loans for a parent or subsidiary of the underwriter's approved employer. A direct endorsement underwriter's authority is through the employer and does not extend under any corporate "umbrella."

Clearly one can see that an originator can not close FHA loans and work at any other real estate related position. As I previously mentioned in another blog, HUD will allow for a non-hud approved broker to charge their borrower a reasonable broker fee for services performed in trying to obtain them a loan. The loan must then be re-originated, processed, underwritten and funded through a hud-approved lender. Artisan Mortgage has a program that I spearheaded called Optimal FHA that offers this service. Our program is HUD and RESPA compliant. Visit www.fharates.info for additional information.