Mortgage Grapevine

What's the difference between a "Satellite" and "Branch" office RE: HUD Guidelines?

We are looking at opening offices within same area, all under same HOC and field office. The 4700.02 states we don't have to jump through the 40 hoops of HUD if they are "Satellites"...
by chow March 13, 2002 12:00 AM

Hi Chow,

You´re correct on the difference between branches and satellites, but I believe that you´re a Correspondent with HUD, correct? A Corr. can have branches (if you meet the requirements) but not satellites, only the "big boys" can have satellites. If you qualify to have satellites they have to be in areas in which you´re already HUD approved (and possibly need to already have an ofc there, not certain on that part), new areas would require a branch instead.

That said, it remains that a Corr can´t have satellites. Sorry for the bad news.

by Jimbo36 March 13, 2002 12:00 AM

chow - Didn´t I see a thread recently, that gave info on where you contact HUD for answers to things like this - and get the REAL answer?
by Peter March 13, 2002 12:00 AM

HUD will say that it´s in the guidelines or on their website, look it up. We found an answer (on a different topic, after an hour and a half of looking) that HUD Orlando, Atlanta, & the DE underwriter all got wrong. Don´t you love all the shades of gray? The answer above is from the guidelines, I don´t make this stuff up, that is the REAL answer.
by Jimbo36 March 13, 2002 12:00 AM

I guess a 3.5 MM "big boy" still has questions.....fine, I´ll spend another hour and a half there.
by chow March 13, 2002 12:00 AM

Jimbo: I would love to know where you get your information. I just spoke to Jacqueline Jones at Lynn Herbert´s office at HUD (202-708-3976) and she gave me the answer that ANY mortgagee (Lender or Correspondent) can have a satellite office...as long as in the same jurisdiction and NO processing of the loans occur in the satellite. Be careful, however, that ONLY the application is taken at the satellite office...HUD is very strict as to what constitutes processing, including the ordering of the credit report and the appraisal. Chow, try calling Jackie Jones at the above number if you have further questions and concerns.
by Pam Strickland March 14, 2002 12:00 AM

HUD, love to hate them and those pesky questions when you call and get a different answer depending on where you call. I was wondering about that processing issue.

Thanks Pam!

Just for giggles-What if you have a contract processor? I guess what I´m wondering is where´s that line for an office to be considered one, or the other? If all the underwriting is either done at the main office, or by the lender, and we used contract processors to help fill in some for the remote areas....

Go ahead Jimbo take a stab at it. It´s just an opinion, and I have to run this all by our local legal beagle anyway.
by chow March 14, 2002 12:00 AM

My info comes from the guidelines on HUD´s website. Before we opened our 1st branch we were hoping to do it as a satellite, just like you Chow. The guidelines say that a supervised or non-supervised HUD mtgee can have satellites. HUD Corr are not either of those, if we´re allowed HUD needs to correct it and add "Correspondents" to those who can.

Speaking of HUD gray areas, get this from our HUD audit. D/O findings don´t mean squat, D/O is not an acceptable underwriting engine, only D/U counts. Period. I even forwarded them the e-mail from Fannie that says D/O & D/U access the same engine and that the findings are one and the same. HUD said "No D/O".

I don´t doubt that Jackie gave Pam the answer she says. I just know that someone else there will give you the opposite answer & when you ask about the different answers they say that you´ll have to look it up to be sure.

by Jimbo36 March 15, 2002 12:00 AM

Perhaps what we have here is a confusion in terms and a problem with semantics: A NON-SUPERVISED MORTGAGEE is a LENDER...a SUPERVISED MORTGAGEE is a BROKER. BOTH are MORTGAGEES. Whew.
by Pam Strickland March 15, 2002 12:00 AM

"What we have here is a failure to communicate" -- Cool Hand Luke

Read the license categories again Pam. HUD Correspondents are neither of the above. HUD Corr only need $50k net worth (changing to $63k) and are neither supervised or non-supervised lenders under HUD (those categories are both higher up the food chain than a corr.). Supervised & non-supervised can both have satellites, correspondents can´t. These are 3 distinct HUD mtgee categories, not what you described above. That´s why you´re getting the wrong answer, you have to ask the question correctly.
by Jimbo36 March 18, 2002 12:00 AM

Jimbo...you are wrong. Period. There are 2, I repeat 2, categories. Perhaps you need to call Jackie Jones at the above number and speak to her yourself. I repeat, you are wrong...dead wrong.
by Pam Strickland March 18, 2002 12:00 AM

Okay you two...You´re both nice, helpful people...here´s the situation and why I am asking.

We currently operate as a broker, but could flip to a table funder....

Now, We want to know if we can just get a few offices open, use the mail office as a base of operations- (We have two DE´s we aren´t using for antything other than processing right now)

IF we supplement the current processing staff, with Contract Processors, are we within guidelines, if those offices are satellite offices? All the QC would be done at home office, but the contract processors would work with the outlaying offices, and work with the in house processing staff, at mail office.

I know this gets a little into splitting hairs, but look at all the opinions you can have. Besides, I like driving my lawyer´s nutty. I need some gratification out of the check I write. (and you know it´s all a matter of who´s opinion wins if HUD came walking in the door)
by chow March 18, 2002 12:00 AM

About ordering stuff-credit reports, ect. In this day of laptops, I can set at home and work on apps if I don´t get done during the day, and I pull the credit off of the internet while I´m in the customers home sometimes. Isn´t it rather hard to distinguish some of this? The more I look at it, the more I think we would just be better off doing the Branch set up so we´re covered, and just use the new office as a application taking center until that´s finalized.
by chow March 19, 2002 12:00 AM

As I said before, Pam, I don´t make this stuff up. You seem to be tight with Jackie, ask her about the following.

from HUD Handbook, 4060.1 REV-1, Chapter 3.
Special Approval Requirements for Different Mortgagee Types:

A Supervised Mortgagee is a financial institution that is a member of the Federal Reserve System or an institution whose accounts are insured by the FDIC or the NCUA.

A Nonsupervised Mortgagee is a financial institution that has as its principal activity the lending or investment of funds in real estate mortgages.

A Loan Correspondent is an institution that has as its principal activity the origination of mortgages for sale or transfer to a Sponsor(s).

I could be wrong but I count three (3) categories. Add to that that 3-3, C, which is the requirement for a Nonsupervised to maintain a warehouse line for a minimum of $1,000,000 (1 Million U.S. Dollars). Being just this side of stupid I think I qualify to judge whether my company is a bank or not, whether we maintain a warehouse line for that much money or not, or whether we have neither qualification and fall into the Corr category, $50k NET worth, etc., and selling loans to our Sponsor(s).

I´ll add that I´ve originated FHA for 5 years, other loan types longer than that, and that this is the info sent to me by HUD 21 months ago when we opened our office. We couldn´t find a net branch who followed HUD regs (re employees, mtgee paying all expenses, etc) so we put up our own money, partially due to the HUD Mtgee info pkg. Has it changed so drastically without any notification by HUD? If so let me know so I can get HUD to send me the updated info.

by Jimbo36 March 19, 2002 12:00 AM

You ever attend law school Jimbo? Dang, you´d make a great debater!

Okay......this is what I was thinking....
by chow March 19, 2002 12:00 AM

It is sad that people who know nothing act like experts on here. What a state this "profession" is in. Who is this "Jimbo" who won´t even give his real name, who has no concept of the regulations, and is missing out on satellite offices because he is too 1) stubborn or 2) stupid to get the right info. Jeez.
by Pam Strickland March 19, 2002 12:00 AM

Chow - Thank you, I try. In 2 wks I´ll be 39, what do you think, Jimbo39 or DBater (DBaitr)? I´m in FL but people might think I just love to fish. Thanks for being one of the good, accurate ´viners.

Pam - I see you´ve now lowered yourself to personal attacks. I wonder why I thought you might actually address this issue (which is why I posted the regulations you say I know nothing about)? Chow seems to think my argument may be valid, provided the regs I posted are accurate. Have you ignored the issue because you´ve realized you´re wrong or did you just get sidetracked? I look forward to reading what you and/or Jackie have to say REGARDING the parts of HUD 4060 posted above, which is the issue here (Reminder: 2 vs. 3 categories of licenses AND whether only supervised & nonsupervised can have satellites or if all 3, including HUD Correspondents, can have satellites. The regs say supervised and nonsupervised).

btw, I said I´m just this side of stupid, I didn´t say I´ve crossed the line yet. As for stubborn, I am, but am willing to change my position if you can provide the Regs or tell me which one supercedes 4060, chap 3 listed above (Please do, I would love to open satellites with no addtnl net worth requirements). If there have been no changes to the above regs, are you willing to admit your error and change your position?

by Jimbo36 March 20, 2002 12:00 AM

I almost forgot, any comment on your post that a supervised lender is a broker vs. the posted HUD reg that it is actually a member of the Federal Reserve System or an institution whose accounts are insured by the FDIC or NCUA?

Us stoo-pid folks thought those were two VERY DIFFERENT things.
by Jimbo36 March 20, 2002 12:00 AM

You both could be right in some ways. But that´s why we pay our attorney fee´s. I can´t even bribe Thorlaw or
Raddatz into this can I?
by chow March 20, 2002 12:00 AM


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