| ID | Status | Date | Public/Private | Industry | AHACPA Contact |
|---|---|---|---|---|---|
| #8092 | Closed | public | FHA Lender |
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An FHA lender client is looking into an ESOP. If they sell into an ESOP trust they will have a large deficit in equity due to the ESOP loan. How would this impact FHA/GNMA minimum net capital requirements? |
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From Mike Olsen: The entity that has FHA/GNMA approval must maintain and meet the net worth requirements at all times. If their net worth drops below the required amount, the owners will be required to make a capital contribution into the company to bring the net worth back into compliance. In addition, they would need to notify FHA that they have a deficiency and include a corrective action plan to correct it. Otherwise, FHA will determine that they are not in compliance and refer them to the Mortgagee Review Board who will issue civil money penalties against them and/or revoke their FHA approval, which would also revoke their GNMA approval, since you must have FHA approval and in good standing to be approved by GNMA. I hope this answers your question, if not, please call me so we can discuss. |