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November 14, 2002

Letter to the Editor: Net Branching is Not Per Se Unacceptable to HUDGary LehnesHUD, FHA, Net BranchesIn the July issue of The Mortgage Press it was reported that, "Also addressed at the convention
was HUD's stand on net branching. Net branching, and the use of a lender's FHA identification
number by anyone other than the lender is unacceptable and is subject to fine..." This is an
inaccurate and misleading statement. There was a similar statement in another trade publication.
Certainly, it is unacceptable for someone other than the lender to use that lenders' identification
number. The statement infers that "net branch companies" allow their branches to deliver loans in
this manner. Nothing could be further from the truth, at least as far as Ivy Mortgage Net
Branching is concerned. All of Ivy Mortgage's branches, net or otherwise, have HUD branch
identification numbers and deliver loans in full compliance with HUD guidelines.
As with many other aspects of the mortgage industry, there are always different ways of doing
business. Some people and/or companies take shortcuts that move them out of compliance.
People sometimes put labels on the entire, or portions of, the industry, which are not fair and
accurate. There is no universal definition of what a net branch is. At Ivy, a net branch is an
alternative compensation program where the branch manager's compensation is based upon the
"net" profit of the branch. Hence, the term "Net Branch."
The fact that you call an office a "net branch" does not change the fact that this branch office
must meet the same requirements as any other "branch office" to comply with all HUD, state,
and federal regulations as they may be applicable. If a company is not complying with
regulations, federal or otherwise, our industry should do whatever it can to get them to comply.
What we should not do is try to put a bad connotation on legitimate business operations!
Gary Lehnes, National Sales Manager-Net Branches
Ivy Mortgage

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