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Dianne Y.  A…, Real Estate Pro in San Antonio, TX

Does FHA allow a mortgage loan officer who originates FHA loans to sell real estate or to have an active real estate license?

Asked by Dianne Y. Ayala Steffey, MBA, CLU, ChFC, NMLS #267658, San Antonio, TX Sun Mar 6, 2011

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james wu’s answer
The original discuss was 2011 and now it is 2014. Do we have a clear answer yet. I still have people not very clear.

I actually saw broker with real estate license originating FHA loans as a broker. As HUD no longer approve brokers and the restrictions are all apply to "lender"s but not brokers.
0 votes Thank Flag Link Wed Jun 4, 2014
BEST ANSWER
Mortgagee Letter 96-18 (yes, it's actually that long ago) prohibits anyone from receiving compensation on FHA files unless they are full-time lenders (and they work on the file). This means you cannot be a Realtor, too, nor anything else for that matter.

While the handbook provides additional guidance, 'FHA' and 'Realtor' don't mix.

"Sell Houses - Lend FHA - Go to Jail" It's a lot like driving drunk - that might be safer.

Here is the passage from 96-18 quoted:
IV. ADDITIONAL INFORMATION

Multiple Employers. With the exception of receptionists, and technical
staff such as appraisers and inspectors, lender employees may not work
for more than one company engaged in the real estate finance business at
the same time. This also includes working as a real estate agent or
broker as well as originating or underwriting loans for more than one
lending institution.
Web Reference: http://www.SumnerRealty.com
3 votes Thank Flag Link Mon Mar 7, 2011
It seems like everyone has an answer ( all the big time money makers with their fancy pictures !!! ) Here is the anwer to anyone who likes the know the FACT !!
IF your broker has a Full Eagle or Mini Eagle endorsement from HUD and originates FHA under HUD supervision, then NO, paragraph 2-9 Handbook 4060.1, Rev-2 still applies you may NOT assume dual agency rolls; however, If your broker is not a direct HUD approved "lender" and originates FHA only through HUD sponsored wholesale lenders, then HUD no longer has restrictions as of 5/10 and it is up to your sponsering lenders to supervise your activities and you may sell real estate and originate FHA, just not on the same closing.

Confirm company's status with your broker and if broker is not HUD approved, verify if your endorsing FHA lenders permits you to do real estate sales - most of them do as of 5/10.
3 votes Thank Flag Link Tue May 24, 2011
Tom,

You just need to look at those who answered this question within the Trulia community. Don't get me wrong, I would love to be able to do both, but based on HUD regulation, it's not allowed.


Dianne Y. Ayala Steffey, MBA, CLU, ChFC, NMLS#267658
Your Personal Mortgage Consultant for Life!
Sterling Mortgage Services NMLS#373771
2929 Mossrock, Ste 222
San Antonio, TX 78230
210.349.2102
210.349.1544 fax
210.831.8749 cell
http://www.sterlingloans.biz
dianne@sterlingloans.biz
3 votes Thank Flag Link Mon Mar 7, 2011
Gerard,

If your office does not originate FHA loans, you can work as both a Real Estate Agent and a Mortgage Loan Originator on VA, Conventional, and USDA loans. There is no restriction on these types of loans; just FHA.

I hope that helps!

Sincerely,

Dianne Y. Ayala Steffey, MBA, CLU, ChFC, NMLS#267658
Your Personal Mortgage Consultant for Life!
Sterling Mortgage Services NMLS#373771
2929 Mossrock, Ste 222
San Antonio, TX 78230
210.349.2102
210.349.1544 fax
210.831.8749 cell http://www.sterlingloans.biz
dianne@sterlingloans.biz
2 votes Thank Flag Link Wed Mar 9, 2011
Technically you cannot do FHA loans when you have 1099 income. If you are an agent you cannot do an FHA loan and represent the buyer. That is different on a conventional transaction where you can do both.
Web Reference: http://dmdrealtydfw.com
2 votes Thank Flag Link Mon Mar 7, 2011
To All,

The reason I asked this question is because I see a number of mortgage brokers who are engaging in real estate activity, when they should not be. And, I wanted to see what kind of answers I would get. However, I'm not surprised by these answers.

FHA has made it very clear that you cannot work for more than one particular company if you are in the mortgage business, and the other business is real estated related. The Quality Assurance Dept of HUD is cracking down on this very heavily and we are seeing that in my city.

If and only if you do not engage in FHA origination, then you are allowed to act as both the loan originator and the real estate agent. It does not matter on any other types of loans, only FHA. Also, it does not matter if you are a mortgage broker or a mortgage banker. The rule is the same for both types of originator.

So, be careful. HUD may be sending you a letter if they find out that you are violating this rule.

Below is HUD's answer and the reference that backs it up.

Thank you for contacting the FHA Resource Center, a response to your inquiry is provided below. If you have additional questions you can submit them via email to info@fhaoutreach.com or contact us at 1-800-225-5342. Please do not respond to this email unless you need further clarification or wish to initiate a new service request.

FAQ : Can I work for a lender as a loan officer and at the same time work as a realtor for another company?

Solution Details : No. The following restriction applies to all loan officers of a FHA approved lender who work on FHA loans.
With the exception of receptionists and technical staff such as appraisers and inspectors, lender employees (such as loan officers, underwriters, processors and other support personnel) must work exclusively for one lender and cannot work (even on a part time basis) for other lenders or other companies engaged in the real estate or mortgage finance business at the same time they are working for the lender.
This also includes working as a real estate agent or broker for another company. A loan officer may hold a real estate license but may not engage in realtor activities or be employed anywhere else in mortgage lending, real estate, or a related field.

Please see paragraphs 2-9G of Handbook 4060.1 at:
http://www.hud.gov/offices/adm/hudclips/handbooks/hsgh/4060.…
2 votes Thank Flag Link Mon Mar 7, 2011
I have a real estate as well as a mortgage license and I do both with only my clients best interest at heart - its extremely important to them because most real estate agents don't truly understand just what "one can afford" really means -- I have had 100% success in client satisfaction and keep up on ALL changes in the industry - YES you can do both - and do it well!
Flag Fri Dec 27, 2013
Dianne, Great question and thread. I remain amazed by the number of people who want to play on both sides of the street. I do not understand the benefit to a consumer who works with a "Jack of all Trades and Master of Nothing" representative. I cannot possible imagine on anyone could stay abreast to the changes in either mortgage financing or real estate when working at both professions. It seems that I see someone on the advice columns every week who pontificates about doing both real estate and loans (including FHA). Scary.
1 vote Thank Flag Link Wed Jan 18, 2012
Can a loan officer of a sponsored third party originator also be a real estate agent?

Yes, if the sponsored third party originator is not a FHA approved lender or an employee of a FHA approved lender.
However, the loan originators of non-FHA approved entities must comply with applicable federal, state, and local requirements governing their FHA loan activities.
If the sponsored third party originator is a FHA approved lender, it is subject to the staffing and employment requirements in Handbook 4060.1, Chapter 2.
FHA does not prohibit loan originators of FHA approved lenders from maintaining a real estate broker or sales agent license, as long as the FHA approved lender has controls in place to ensure the individual does not make use of their license.

Housing Handbook 4060.1 is available at http://portal.hud.gov/hudportal/HUD?src=/program_offices/adm…

For Mortgagee Letters go to http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/
1 vote Thank Flag Link Tue Jan 17, 2012
Thank you for that Jesse, I read this, very clear.
Flag Mon Jun 9, 2014
@TE Sumner - I stand corrected! Thank you much for the clarification!

Is it the same issue with Conventional loans?

Gerry Dunn
Associate Broker
Serving Maryland, D.C. and Northern Virginia
1 vote Thank Flag Link Tue Mar 8, 2011
As a Realtor and a Broker I can originate conventional loans for my real estate clients. On FHA I am only allowed to originate personally loans on which I am not involved in the transaction as the Realtor.

Being able to save your buyer clients thousands on their financing when buying a home is a great way to differentiate yourself from the competition.


Don Groff
REALTOR | Mortgage Broker
Keller Williams Realty | 360 Lending Group
512.669.5599
listings@dongroff.com
1 vote Thank Flag Link Mon Mar 7, 2011
You can check the FHA guidelines http://portal.hud.gov/portal/page/portal/HUD
1 vote Thank Flag Link Mon Mar 7, 2011
There are no restrictions against Mortgage Bankers holding licenses for both originating loans and selling real estate.

They will be restricted from originating loans on any property they are involved with on the sales side. You cannot wear both hats.

Some companies may have prohibitions against doing both. As in most things, full disclosure is important.

Good Luck!

Gerry Dunn
Associate Broker
Serving Maryland, D.C and Northern Virginia
1 vote Thank Flag Link Mon Mar 7, 2011
Does FHA allow a mortgage loan officer to hold an active life and health insurance license while originating loans. Can a loan officer originate on all loans but FHA, while still holding a insurance license? I am a MD agent.
0 votes Thank Flag Link Sat Jun 8, 2013
I do both. I own a Real Estate Brokerage and I work full time as a LoanOficer for a Sponsored Third Party Originator and in my combined 20 years in both businesses, I find that Loan Originators (the people) make REALLY great Real Estate Agents, but more often, Real Estate Agents (again, the people) typically make quite poor Loan originators. A consumer should be much more skeptical of a Real Estate Agent (person) who claims to be a great LO, than a Great Loan Officer with a Real Estate License.
Furthermore, where is the Conflict?
0 votes Thank Flag Link Tue May 7, 2013
I agree 100%
Flag Mon Jun 9, 2014
Homebuyer,
The question is whether you originate or your office originates FHA loans. If you or your office doesn't, it then becomes a non-issue. But, if you or office does, then
Mortgagee Letter 96-18 precludes you from doing such.
Flag Tue May 7, 2013
Dianne....

Me either.

There are always people in this industry that spend more time getting around the rules than focusing on their business.....

Does ANYONE know what your business is?
It is the CLIENT!!!! NOT your paycheck!!!!

Pay attention to the client and the paycheck will come.

FOCUS on your business.... not the loopholes
0 votes Thank Flag Link Wed Jan 18, 2012
This topic came up with one of my colleagues after an industry meeting. She told me that there had been a change in this rule allowing for both licenses on a FHA transaction. I have not received a mortgagee letter stating anything different.
0 votes Thank Flag Link Wed Jan 18, 2012
Gonzo seems well versed on the 'loopholes'

It is FHAs intention for the realtor to NOT be the loan officer.
0 votes Thank Flag Link Wed Jan 18, 2012
Tom,

If you rationalize enough you will come to believe that it's OK. Until, you get caught. As stated by many good lawyers, "Stupidity is no defense to the law!"

Dianne
0 votes Thank Flag Link Tue May 31, 2011
If you can do both well what's the problem. BTW you can do it if you are a third party.
Flag Mon Jun 9, 2014
Diane,

I am NOT surprised by some of the answers.
Some people think they can get around the rules
0 votes Thank Flag Link Tue May 31, 2011
You can't substitute second hand advice for cold hard facts when it comes to compliance!
0 votes Thank Flag Link Tue May 31, 2011
You are so right, Elliott! But, you would be surprised as to the number of mortgage professionals who have answered otherwise to this question. Scary!
0 votes Thank Flag Link Tue May 31, 2011
Slam dunk hit the nail on the head. Nice to see people out there that actually look up the rules!
0 votes Thank Flag Link Tue May 31, 2011
Gerard,

You can have both licenses, but you can not actively use both at the same time if you are originating FHA loans. You have to select either to be a Realtor or a mortgage originator. Now, if your mortgage brokerage office does not originate FHA loans (which undoubtedly they would), then you can do both. Otherwise, it is illegal to do both, if your office originates FHA loans.
0 votes Thank Flag Link Thu May 26, 2011
As long as they have a mortgage license they are free to have an other license they want, there is nothing wrong with it at all! I would worry if my Real Estate Agent was also acting as My Mortgage Broker but as far as having both licenses there is nothing wrong with it, would be like a doctor or a Lawyer who also sell real estate!
0 votes Thank Flag Link Thu May 26, 2011
What would you worry about?
Flag Mon Jun 9, 2014
T.E.

Thanks for reminding me about the TexVet loans. I overlooked that one. The rule is you can be both the Realtor and the mortgage originator for any other loan, other than FHA. However, if your office originates FHA loans, you can not act as both, period!

SO, IF YOU ARE DOING THIS, PLEASE BEWARE. THE FINES ARE HEFTY.

I hope that his helps clarify this. HUD is cracking down on this, especially with the new MLO Compensation issue.

Sincerely,

Dianne Y. Ayala Steffey, MBA, CLU, ChFC, NMLS#267658
Your Personal Mortgage Consultant for Life!
Sterling Mortgage Services NMLS#373771
2929 Mossrock, Ste 222
San Antonio, TX 78230
210.349.2102
210.349.1544 fax
210.831.8749 cell http://www.sterlingloans.biz
dianne@sterlingloans.biz
0 votes Thank Flag Link Wed Mar 9, 2011
Dianne, you keep saying this but it is rather clear that TPO and Mortgage Brokers are not FHA Lenders. They can act as real estate agents and brokers all the while originating FHA loans that will fund under the name of a different FHA Lender. I think as you keep repeating "your office originates FHA loans..." that you are confusing people to the facts. Another lovely detail being left out is how many FHA Lenders (control persons) are also owners of real estate agencies but do not act as broker or sales person. There are far more loopholes at the top of the food chain than there are at the bottom. Scaring the little guy with fines and fudgy scare tactics is why we have a bunch of morons left in the business after the great purge.

Michael Angelo Worthen
Mortgage Banker NMLS:851810
Mike@MichaelAngeloMortgage.com
http://MichaelAngeloMortgage.com
NewCastle Home Loans | NMLS:150580
HUD Lender 2074900006 | 69 N Gore Ave, St Louis, MO 63119
C: 314-365-6303
P: 314-219-5989
TF: 855-630-LOAN
Flag Wed Aug 6, 2014
Gerard,

A NMLS-registered loan officer is not prohibited from originating loans that are conventional, VA, USDA or TexVet. Only FHA has published such a prohibition.

While I believe that the rule is too restrictive, it is a rule (for FHA loans).

T.E. Sumner
NMLS #275033
Web Reference: http://www.Mortgages-TX.com
0 votes Thank Flag Link Wed Mar 9, 2011
It is restrictive because it penalizes the honorable practitioner because of a few bad agents. If you follow the rules you should be an excellent broker of both. A Professional Real Estate consultant knows all aspects of the industry. It is insulting to put restrictions on those who have seriously committed to this industry.
Flag Mon Jun 9, 2014
T.E.
I need to use your slogan for a blog post.... that is good!!
0 votes Thank Flag Link Tue Mar 8, 2011
HUD has always been clear on this..... And your answer from HUD is exactly what I would expect them to say.
I am surprised these people are still in business.

So, you say that you are seeing loan officers engage in realtor activities? Are you saying that they are licensed realtors? Or are they assisting FSBO clients?
I believe lenders CAN assist FSBO clients.... but cannot hold a real estate license if they originate FHA loans.

So, these people you refer to..... Acting as a lender and a real estate agent..... Which one are they good at?
0 votes Thank Flag Link Mon Mar 7, 2011
Lets clarify. If you work for a direct Lender with an Eagle NO. If you own your own Mortgage Brokerage Business and are not an FHA Approved Lender, you are third party and you originate FHA for Approved Lenders YES. The responsibility is on the Lender to comply and they do. REFERENCE: ML 10-20: Handbook 4060.1, Paragraph 2-9.G
Flag Mon Jun 9, 2014
Check the guidelines however you can have both licenses MY UNDERSTANDING you can't do both sides of transactions loan/ real estate.

Lynn911 Dallas Realtor & Consultant, Loan Officer, Credit Repair Advisor
The Michael Group - Dallas Business Journal Top Ranked Realtors
972-699-9111
http://www.lynn911.com
0 votes Thank Flag Link Mon Mar 7, 2011
You can be a Realtor and a Loan officer, but on FHA transactions you can either be the Realtor or the LO but not both. However, someone from your mortgage office can be the LO on the transaction. I hold dual Broker’s licenses and on conventional, I can be both the Realtor and LO with disclosure. However on FHA loans, I use a LO from my office. Just remember in Texas if you are handling both sides of the transactions, then you must provide a “ Multiple Role in a Real Estate Transaction” disclosure to the buyer.
0 votes Thank Flag Link Mon Mar 7, 2011
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