Does FHA allow net branching?

No. The Mortgagee must not engage an existing, legally separate mortgage company or broker to function as the lender’s branch office or Doing Business As (DBA) name or to conduct FHA activities using the Mortgagee’s FHA approval. 

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. 

In cases where a Mortgagee acquires an existing office with the intent of operating it as a branch office, and the lease of the acquired office is not transferable to the Mortgagee, FHA will allow the Mortgagee to operate the acquired office as a branch office until the lease expires upon its own terms, so long as the Mortgagee can demonstrate that it has assumed financial liability for the payment of the lease. In such cases, the Mortgagee must document and maintain evidence that it has assumed financial liability for the payment of the lease and produce this documentation to FHA upon request. 

For additional information see Handbook 4000.1 I.A.4.d. and 4000.1. I.A.6.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-05102