FHA Single Family Housing Policy Handbook 4000.1, Part V — b. Operational Compliance (12/02/2024)

FHA Single Family Housing Policy Handbook 4000.1, Part V — b. Operational Compliance (12/02/2024)

b. Operational Compliance (12/02/2024) The Mortgagee must ensure that its QC Plan provides for the following required reviews. i. Personnel (A) Training (1) Loan Administration and Quality Control Processes (a) Standard The Mortgagee must train all staff involved in FHA Loan Administration and QC processes to ensure that staff know all current FHA requirements for the FHA Loan Administration practices for which the Mortgagee is responsible. V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE A. Quality Control of Lenders and Mortgagees 2. Institutional Quality Control Program Requirements Handbook 4000.1 1696 Last Revised: 11/26/2025 (b) Required Documentation The Mortgagee must maintain a list of all training provided to staff. For each training, the Mortgagee must include a summary of the content covered. (2) Access to FHA Guidance (a) Standard The Mortgagee must provide all Loan Administration and QC staff with access to current FHA guidance including Handbooks, Mortgagee Letters (ML), Title I Letters (TI), Frequently Asked Questions (FAQ), and other guidance issued by FHA. (b) Required Documentation The Mortgagee must confirm that all Loan Administration and QC staff have access to the internet or to hard copies of current FHA guidance. (B) Restricted Participation (1) Standard The Mortgagee must confirm it verified, through each of the following systems, that the designated employees and/or Affiliates listed below were permitted to participate in FHA programs. If any of the designated employees and/or Affiliates are found to be ineligible, they are restricted from participating in FHA programs. Checks to verify employee eligibility must be conducted at least semiannually. (a) Excluded Parties List The Mortgagee must verify employee eligibility for all officers, partners, directors, principals, managers, supervisors, loan processors, loan underwriters, loan originators, and all other employees and Affiliates participating in U.S. Department of Housing and Urban Development (HUD) programs for or on behalf of the Mortgagee, using the System for Award Management (SAM) Excluded Parties List. (b) Limited Denial of Participation The Mortgagee must verify employee eligibility for all officers, partners, directors, principals, managers, supervisors, loan processors, loan underwriters, loan originators, and all other employees and Affiliates participating in HUD programs for or on behalf of the Mortgagee, using the Limited Denial of Participation (LDP) List. V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE A. Quality Control of Lenders and Mortgagees 2. Institutional Quality Control Program Requirements Handbook 4000.1 1697 Last Revised: 11/26/2025 (c) National Mortgage Licensing System and Registry The Mortgagee must verify that all employees and Affiliates participating in HUD programs for or on behalf of the Mortgagee are registered with the National Mortgage Licensing System and Registry (NMLS), unless excluded from NMLS requirements by law or regulation. (2) Required Documentation Mortgagees must maintain documentation that supports each employee’s eligibility. ii. Affiliate Quality Control Reviews (A) Standard The Mortgagee must perform QC reviews of its Affiliates in the same manner and under the same conditions as required for the Mortgagee’s own operations. At a minimum, Affiliate monitoring must include a periodic (semiannual at a minimum) reverification of the Affiliate’s compliance with all applicable laws related to licensing, qualification, eligibility, or approval to originate or subservice Mortgages. (B) Required Documentation The Mortgagee must document the methodology used to review Affiliates, the results of each review, and any corrective actions taken as a result of review Findings. The procedures used to review and monitor a Mortgagee’s Affiliates must be included in the Mortgagee’s QC Plan. iii. Fair Housing and Fair Lending The Mortgagee must verify that its operations comply with applicable state and federal fair lending laws, including the following: • Fair Housing Act (42 U.S.C. § 3601 et seq.) • ECOA (15 U.S.C § 1691 et seq.) • Federal Truth in Lending Act (15 U.S.C. § 1601 et seq.) (A) Denied Mortgage Applications (1) Standard The Mortgagee must review a random statistical sample of denied applications within 90 Days from the end of the month in which the decision was made. Reviews must be conducted on a monthly basis and ensure that: • the reasons given for denial were valid; • each denial has the concurrence of an officer, senior staff person, or underwriter with sufficient approval authority, or a committee chaired by V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE A. Quality Control of Lenders and Mortgagees 2. Institutional Quality Control Program Requirements Handbook 4000.1 1698 Last Revised: 11/26/2025 an officer, senior staff person, or underwriter with sufficient approval authority; • the requirements of the ECOA are met and documented in each file; and • no civil rights violations were committed in the denial of the application. Where possible discrimination is noted, the Mortgagee must take immediate corrective action to ensure its operations comply with applicable state and federal fair lending laws. (2) Required Documentation The Mortgagee must document the methodology used to review denied applications, the results of each review, and any corrective actions taken as a result of review Findings. The procedures used to review denied applications must be included in the Mortgagee’s QC Plan. (B) Fair Housing Poster and Equal Housing Opportunity Logo (1) Standard The Mortgagee must verify that a fair housing poster is prominently displayed in the Mortgagee’s home office and any branch offices that deal with Borrowers and the general public. The Mortgagee must verify that the equal housing opportunity logo is prominently displayed on all documents, including both hard copy and electronic documents, distributed by the Mortgagee to the public. (2) Required Documentation The Mortgagee must confirm that a fair housing poster is prominently displayed in the Mortgagee’s offices. The Mortgagee must be able to demonstrate that all documents distributed by the Mortgagee to the public contain the equal housing opportunity logo. (C) Fair Housing or Discrimination Violations (1) Standard Potential fair housing violations or instances of discrimination must be reported to HUD’s Office of Fair Housing and Equal Opportunity (FHEO) immediately. (2) Required Documentation Fair housing violations and complaints may be reported online using the HUD Form 903 Online Complaint, contacting HUD’s local FHEO Regional Office or by calling the Fair Housing Complaint Hotline at 1-800-669-9777. V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE A. Quality Control of Lenders and Mortgagees 2. Institutional Quality Control Program Requirements Handbook 4000.1 1699 Last Revised: 11/26/2025 iv. Escrow Funds (A) Standard The Mortgagee must verify that escrow funds received from Borrowers were used only for the purpose for which they were received, and are in compliance with all Consumer Financial Protection Bureau (CFPB) escrow requirements. (B) Required Documentation The Mortgagee must retain the results of each review and any corrective actions taken as a result of review Findings. v. Mortgage Insurance Premiums (A) Standard The Mortgagee must verify that FHA Mortgage Insurance Premiums (MIP) were remitted to FHA within the required time period or, if not, that the remittance included Late Charges and interest penalties. Mortgagees must address any pattern of late submissions and promptly take corrective measures. (B) Required Documentation The Mortgagee must retain the results of each review and any corrective actions taken as a result of review Findings. vi. Timely and Accurate Submission for Insurance (A) Standard The Mortgagee must verify that Mortgages are being submitted to FHA for insurance within the required time frames. See Case Binder Submission – Direct Endorsement Non-lender Insurance, Post-closing and Insurance for Property Improvement Loan Program and Post-closing and Endorsement for Manufactured Home Loan Program. (B) Required Documentation The Mortgagee must retain the results of each review and any corrective actions taken as a result of review Findings. vii. Advertising (A) Standard The Mortgagee must review all advertisements generated by the Mortgagee or on its behalf to verify compliance with HUD/FHA advertising requirements. See V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE A. Quality Control of Lenders and Mortgagees 2. Institutional Quality Control Program Requirements Handbook 4000.1 1700 Last Revised: 11/26/2025 Advertising. The Mortgagee must take prompt corrective action upon discovering any violation of advertising requirements described in this Handbook 4000.1. (B) Required Documentation The Mortgagee must retain copies of any Advertising Device the Mortgagee produces, or that is produced on the Mortgagee’s behalf, that is related to FHA programs. The Mortgagee must retain samples of the advertising reviewed, the results of each review, and any corrective actions taken as a result of review Findings. viii. Reportable Cyber Incident (A) Definition A Cyber Incident is an occurrence that results in actual harm to the confidentiality, integrity, or availability of an information system or the information that the system processes, stores, or transmits. A Reportable Cyber Incident is a Cyber Incident that has materially disrupted or degraded, or is reasonably likely to materially disrupt or degrade, the FHA-approved Mortgagee’s ability to meet its operational obligations for originating or servicing FHA-insured Mortgages. (B) Standard An FHA-approved Mortgagee that has experienced a Reportable Cyber Incident must report the Cyber Incident to HUD’s FHA Resource Center at [email protected] and HUD’s Security Operations Center at [email protected] as soon as possible and no later than 36 hours after the Mortgagee has determined that a Reportable Cyber Incident has occurred. (C) Required Documentation Cyber Incidents reported to HUD’s FHA Resource center at [email protected] and HUD’s Security Operations Center at [email protected] must include the following information: (1) Mortgagee Name (2) Mortgagee ID (3) name, email address, and phone number of the Mortgagee’s point of contact for coordinating follow-up activities (4) description of the Cyber Incident, including the following, if known: • date of Cyber Incident • cause of Cyber Incident • impact to Personally Identifiable Information • impact to login credentials • impact to Information Technology (IT) system architecture • list of any impacted subsidiary or parent companies V. QUALITY CONTROL, OVERSIGHT, AND COMPLIANCE A. Quality Control of Lenders and Mortgagees 2. Institutional Quality Control Program Requirements Handbook 4000.1 1701 Last Revised: 11/26/2025 (5) description of the current status of the Mortgagee’s Cyber Incident response, including whether law enforcement has been notified.

Source: FHA Single Family Housing Policy Handbook 4000.1, Part V — b. Operational Compliance (12/02/2024) · source URL · snapshot 8c03836f77f317e1