What happens if a real estate agent originates an FHA loan?

The lender is responsible for the actions of its staff that participate in FHA transactions. 

FHA may refer any finding for administrative or other enforcement action in its discretion. Referrals may be made to any appropriate body, including but not limited to:
• HUD’s Mortgagee Review Board
• state licensing agencies (e.g., Secretary of State, Real Estate Commissioner, Department of Banking, etc), and/or 
• the Consumer Financial Protection Bureau (CFPB). 

The lender must require its employees to be its employees exclusively, unless they determine that the employee’s other outside employment, including any self-employment, does not create a prohibited conflict of interest. 

The lender may not permit an employee to have multiple roles in a single FHA-insured transaction. Employees are prohibited from having multiple sources of compensation, either directly or indirectly, from a single FHA-insured transaction. 

For additional information see Handbook 4000.1 I.A.3.c.iv.(B)(3)(b)(iv)-(v); I.A.6.f; I.A.6.i; V.E.1 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-05111