Becoming An Approved FHA Nonprofit
Q: How do I become a nonprofit approved to participate in HUD/FHA programs?
A: In order to begin the process of becoming HUD-approved, you need the application package (Mortgagee Letter 00-08 and 02-01) on our Web page, complete and provide to your appropriate Homeownership Center (HOC) to obtain FHA insurance with the same percentage of financing available to owner-occupants (203(b), 203(k)), secondary financing (DAPs) and/or the HUD Homes Program.
Q: What is the FHA Nonprofit Roster?
A: The FHA Nonprofit Roster is the list of FHA Single Family Housing approved nonprofit agencies. HUD published Nonprofit Organization Participation in Certain FHA Single Family Activities; Placement and Removal Procedures on 06/06/02. This federal register notice provides additional information on the approval procedure.
Q: What HUD/FHA programs require approval for nonprofits to participate?
A: There are three types of approval that can be obtained by a nonprofit organization. They are:
1) Approval to purchase HUD homes at a discount. HUD/FHA allows nonprofit organizations to bid on and purchase HUD homes at a discount. This allows the nonprofit to pass on the savings, providing affordable housing opportunities for low-income or first-time home buyers.
2) Approval to finance FHA-insured mortgages at the same terms and conditions as an owner-occupant. This allows nonprofits to purchase properties with lower down-payment requirements, allowing them to fully leverage their funds.
3) Approval to provide secondary financing to borrowers originating FHA-insured mortgages. This allows organizations to provide closing cost or down payment assistance to borrowers in accordance with FHA guidelines. Gifts do not require approval by the HOC.
Q: How long does my HUD/FHA approval last?
A: Unless revoked by the HOC, each nonprofit organization approved by the Department is subject to recertification every two years. This recertification should be requested by the organization within 30 days of the expiration of their previous approval. (See Mortgagee Letter 2000-08 and 2002-01.)
Q: How does a nonprofit determine its recertification date?
A: On the approval letter issued by the HUD Homeownership Center, the approval date is typically in the upper left corner. Starting with that date, add two years, and that will be your agency’s recertification date. For example, if your agency was approved on January 16, 2002, your recertification date would be January 16, 2004.
Q: Where do I send the documentation for my recertification?
A: Send your documents to the Homeownership Center that serves your state. A directory is on the Web.
Q: If my nonprofit organization is approved in one state, do I have to resubmit a complete application package if I want to become active in another?
A: In order to expand your operations into another state you need only provide a copy of your current approval letter, a notification of any changes made in your application since its approval, and an affordable housing plan (see Attachment 1 of the nonprofit application for a sample format) for the new zip codes/geographic area in which you intend to become active. This also applies if you want to participate in another Homeownership Center jurisdiction. However, you would also require a copy of your application noting any changes you may have made since being approved by another HOC. Send your documents to the Homeownership Center that serves the state in which you are applying for approval. A directory can be found on the Web.
Important: Include copies of any letters from the Homeownership Center that previously or currently approved your organization. You must clearly designate the geographic area where your organization plans to do business (e.g., state, cities, and counties). If applying to participate in the HUD Homes Direct Sale Program, you must provide zip codes.
Q: Once my organization is approved, how do I find out which HUD homes are available to purchase with my nonprofit discount?
A: In order to determine what properties are available in your city or state, go to HUD’s web page. Once there, click on the appropriate city or state and view the listings under nonprofit sales. This site is updated regularly with available properties.
Q: Once my organization is approved, whom do I contact about obtaining HUD/FHA financing at the same terms and conditions as an owner-occupant?
A: Your nonprofit organization must apply for FHA-insured financing through an FHA-approved lender. A list of lenders in your area can be found online.
Q: What is the most important HUD document to read?
A: Mortgagee Letter 2000-08 has all the information nonprofit agencies need to get started. Recently HUD published two new mortgagee letters, 2001-30 and 2002-01. Both of these mortgagee letters contain important information for nonprofit agencies. An index of Nonprofit Mortgagee Letters can also be found online.
Click on the Mortgagee Letters listed below for a copy of the actual HUD document
Mortgage Letter 00-8 Nonprofit Agency Participation in Single Family FHA Activities
Mortgagee Letter 01-30 HUD Nonprofit Providers Net Dev calculation
Mortgagee Letter 02.01 Nonprofit Participation New Requirements and Restrictions
