From Mike:

1. Does rent have to be paid?
Where the Branch Manager owns the property and is also a LO and is not being paid rent, you may have a problem. The Handbook (SF 4000.1) requires the mortgagee to pay all of its own operating expenses, which consists of costs associated with equipment, furniture, OFFICE RENT, overhead, employee compensation, etc. If he is not being paid rent, how is he being compensated for the use of the building?

Are there prohibited payments being made? The Mortgagee may compensate a Branch Manager with commission derived form a branch’s “net” profit AFTER the Mortgagee has paid all expenses of the branch office. This is another area where you may have a problem.

Here is what it says in the Handbook:
iii. Compensation
The Mortgagee may provide a branch or regional manager with a commission derived
from a branch’s “net” profit after the Mortgagee has paid all expenses of the branch
office.

6. Post-Approval Operations
g. Payment of Operating Expenses
i. Definition
Operating Expenses are the costs associated with equipment, furniture, office rent,
overhead, employee compensation, etc.
ii. Standard
The Mortgagee must pay all of its own operating expenses, including the expenses of its
home office and any branch offices where it conducts FHA business.
The Mortgagee must maintain all accounts for operating expenses in its name.

h. Prohibited Payments
The Mortgagee, or any of the Mortgagee’s employees, must not pay or receive, or permit any
other party involved in an FHA-insured mortgage transaction to pay or receive, any fee,
kickback, compensation or thing of value to any person or Entity in connection with an FHA insured
mortgage transaction, except for services actually performed and permitted by HUD.
The Mortgagee must not pay a referral fee to any person or Entity.

2. Branch Registration.
Neighborhood Watch is a good source to use for branch compliance attributes. However, all branches of a Mortgagee do not need to be registered. Only those branches who conduct FHA business. Conducting FHA business includes simply accepting an FHA application. If a branch is accepting an FHA application and/or performing other FHA business then it must be registered. Then handbooks also says that the Mortgagee must submit those changes (or additions) with in 10 business days of the change.

Here is what it says in the handbook (SF 4000.1)

Iii Office Facilities
B (2) Mortgagees must also register any branch offices that will conduct FHA business
in accordance with the requirements set forth in the Branch Office requirements
section of this SF Handbook. This includes any branches that will originate,
underwrite, and/or service FHA-insured Mortgages.

4. Branch Offices
a. Registration
The Mortgagee must register all branch offices in which it conducts FHA business, including
originating, underwriting, and/or servicing FHA-insured Mortgages. The Mortgagee must
register each branch office and pay branch office registration fees through the Lender
Electronic Assessment Portal (LEAP). A 10-digit FHA Lender ID will be assigned to each
registered branch office.

7. Post-Approval Changes
The Mortgagee has an ongoing requirement to notify FHA of any changes to the information
outlined in its application for FHA approval or in FHA’s eligibility requirements.
a. Requirements for All Post-Approval Changes
i. Types of Notification
(A) Information Update
An Information Update is any change to a Mortgagee’s basic institution or branch
information in the FHA systems that can be directly managed by the Mortgagee.
ii. Standard
The Mortgagee must submit all Information Updates, Notices of Material Event, and
Change Requests to FHA using LEAP. All Information Updates, Notices of Material
Event, and Change Requests must be submitted within 10 business days of the change,
unless otherwise specified below.
b. Information Updates
The Mortgagee must submit Information Updates, as applicable, for the following
information:
• addresses for correspondence
• point of contact
• all other contact and identification information
• branch office information
• Corporate Officers
• principal/authorized agent relationships
• cash flow accounts

Hope this helps. If you want to discuss this further, please email or call me.

Thanks
Mike