FHA Announces New Rule Easing Branch Office Registration

Partially inspired by improving technology, a Federal Housing Administration rule will no longer require a lender to register every branch office where it conducts FHA business. 

The new regulation, which was proposed last year, will go into effect on March 4. 

By eliminating these requirements, the FHA aims to encourage greater participation in its programs from community-based entities, including smaller loan originators and credit unions.

"This proposed change is based on the mortgage industry's evolution over time and the advancement of technology," FHA stated. "Today, there is no longer a need to maintain several branch offices to conduct FHA business nationwide. While the mortgage industry has evolved, the regulations for branch office registration requirements have remained the same."

The agency's goal is to enable smaller loan originators, credit unions, and others to offer FHA-insured loan products in branch offices that they had not previously registered due to business volume considerations, thus expanding the availability of FHA programs to underserved communities.

Under the new final rule, mortgagees and lenders will have the option to register all branch offices, and fees will only be applicable to those branch offices registered with the FHA, rather than applying fees to each branch authorized to originate Title II mortgages or Title I loans.

The U.S. Department of Housing and Urban Development (HUD) emphasized that this change will not diminish its oversight of the housing finance ecosystem. HUD will continue to maintain oversight and risk management of lenders and mortgagees, who remain accountable to the FHA for the actions of their branch offices and employees.

This rule applies to all FHA Title I and Title II programs, covering both forward mortgage lending and the FHA-sponsored Home Equity Conversion Mortgage (HECM) program.