How does a nonprofit entity apply for approval to participate in FHA Single Family programs?

FHA requires all nonprofits to obtain approval and be placed on the HUD Nonprofit Roster in order to participate in FHA’s Single Family nonprofit programs.
 
Nonprofits, Nonprofit Instrumentalities of Government (NPIOG) and Section 115 Entities may apply for approval to participate in FHA’s Single Family nonprofit programs as an FHA Mortgagor, as a purchaser of HUD Homes, or to provide secondary financing to borrowers obtaining an FHA-insured first mortgage. 
 
NOTE:  Section 115 Entities, as identified in Section 115 of the Internal Revenue Code, do not require approval to participate in FHA’s Nonprofit Secondary Financing program; however, they must meet the eligibility and application requirements for the HUD Homes and FHA Mortgagor programs.
 
There are two steps that must be successfully completed by entities pursuing nonprofit approval status:
 
Step #1 – Preliminary Review of Programmatic Eligibility
Step #1 is designed as a screening process to provide early identification of Nonprofits that do not meet basic eligibility requirements.  Early identification will save those entities the time and expense of submitting a complete application package.
 
Prospective applicants must submit an email to the FHA Resource Center at: answers@HUD.gov and indicate which nonprofit program(s) they are seeking approval to participate in, and identify the states where the program activities will take place. 
 
Upon receipt of the preliminary eligibility information, the jurisdictional Homeownership Center (HOC) will assign a Point of Contact (POC) to work with the nonprofit to determine whether the nonprofit meets the minimum basic programmatic eligibility criteria. 
 
The prospective applicant must submit the following information to the assigned HOC POC:
  • the nonprofit’s legal name and physical address of the main office;
  • the name, phone number, and email address of the Executive Director;
  • the name, title, phone number, and email address for all staff members requesting system access to submit the formal application and reporting duties as referenced in Step #2;
  • the effective date of the nonprofit’s 501(c)(3) tax-exempt status as reflected in the Internal Revenue Service (IRS) Letter of Determination;
  • the nonprofit’s federal Employer Identification Number (EIN);
  • the FHA nonprofit program(s) for which the nonprofit is seeking approval;
  • indication of whether or not the nonprofit is an Instrumentality of Government; and
  • confirmation that the nonprofit has two years of relevant housing experience within the last five years.  If the HOC POC determines that the preliminary information submitted by the nonprofit is satisfactory, it will recommend proceeding to Step #2, at which time the Nonprofit may proceed to submit a Complete Nonprofit Application through the Nonprofit Data Management System (NPDMS). 

Step #2 – Complete Application through NPDMS
After successfully completing Step #1, the Nonprofit will be granted access to the Nonprofit Data Management System (NPDMS) through which it will submit a Complete Nonprofit Application.  
Note: FHA does not accept paper applications.  NPDMS is an automated, web-based system that is used to electronically submit the application package, and is used by approved nonprofits to submit applications for biennial recertification and mandatory reporting documentation. 
  
The nonprofit must submit a completed application within 30 Days of receiving access to NPDMS.  The application date refers to the date that the application package is electronically submitted through NPDMS.
 
A Complete Nonprofit Application refers to an application that satisfies all general application requirements and all program specific application requirements (outlined in Single Family Housing Policy Handbook 4000.1) for the programs in which the nonprofit seeks approval.  FHA may request additional or clarifying information and provide the nonprofit with a deadline for response.  If the additional information is not provided by the specified deadline, FHA may deny approval on this basis.

In situations where a nonprofit is applying for approval to participate in more than one program and the program-specific application requirements request duplicate information, the information only needs to be submitted once.

Nonprofit entities that submit an incomplete application package will receive a letter indicating the information required to cure the deficiency.  This letter will give the nonprofit 15 Days from the date of the letter to correct any deficiencies.  If the new nonprofit applicant does not satisfy the outstanding requirement in its entirety and within the prescribed deadlines, the application will be denied and the nonprofit must wait an additional 90 Days from the date of the denial letter before it can reapply.
 
An application may be rejected due to deficiencies or for failure to submit a program that complies with applicable regulations and requirements of the Single Family Housing Policy Handbook 4000.1.  Nonprofit entities that are not approved for participation will be issued a rejection letter from the jurisdictional HOC describing the reasons for the application rejection.  In such cases, the nonprofit must wait 90 Days to submit a new application.

Nonprofit entities that are approved for participation will be issued an approval letter from the jurisdictional HOC describing which activities the nonprofit is approved for and any limitations associated with that approval.  An approval is valid for a two-year period. An approval granted by one HOC will be recognized and accepted by all other HOCs, with the exception of the Affordable Housing Program Plan (AHPP).  A nonprofit’s AHPP must be separately approved by every jurisdictional HOC for the geographic areas in which the nonprofit agency seeks to do business.
  
For additional information see Handbook 4000.1 I.B.4.b.iii –viii at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh
 
The HUD Nonprofit Data Management System (NPDMS) can be accessed at: https://www.hudp260.com/Pages/Resources/hudtraining_hudacanp.aspx

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-04560