What are the net worth and liquidity requirements for FHA-approved mortgagees?

Supervised, Nonsupervised, and Investing Mortgagees must meet the adjusted net worth and liquidity requirements at all times.  The requirements do not apply to Government Mortgagees.  The adjusted net worth and liquid assets must be computed in accordance with the HUD OIG Handbook 2000.04, Consolidated Audit Guide for Audits of HUD Programs. 

Single Family Programs
The Mortgagee must have a minimum adjusted net worth of $1,000,000 plus one percent of the total volume in excess of $25,000,000 of FHA Single Family Mortgages originated, underwritten, serviced, and/or purchased during the prior fiscal year, up to a maximum required adjusted net worth of $2,500,000. 

Multifamily Programs With Servicing
The Mortgagee must have a minimum adjusted net worth of $1,000,000 plus an additional net worth of one percent of the total volume in excess of $25,000,000 of FHA multifamily Mortgages originated, purchased, and/or serviced during the prior fiscal year, up to a maximum required net worth of $2,500,000. 

Multifamily Programs Without Servicing
The Mortgagee must have a minimum adjusted net worth of $1,000,000 plus an additional net worth of one-half of one percent of the total volume in excess of $25,000,000 of FHA multifamily Mortgages originated during the prior fiscal year, up to a maximum required net worth of $2,500,000. 

Dual Participation
A Mortgagee approved to participate in both Single Family and Multifamily programs must have a minimum adjusted net worth of $1,000,000 plus an additional net worth of one percent of the total volume in excess of $25,000,000 of the aggregate of FHA Single Family and Multifamily Mortgages originated, underwritten, purchased, and/or serviced during the prior fiscal year, up to a maximum required net worth of $2,500,000. 

Liquidity
The Mortgagee must hold no less than 20 percent of its required adjusted net worth in liquid assets. 

For additional information see Handbook 4000.1 I.A.3.c.vii. & I.A.7.g. available at: https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh


All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-01291