FHA Releases Guidance on Use of Professional Employer Organizations

On November 28, 2016, the Federal Housing Administration (“FHA”) published Mortgagee Letter 2016-18, “Mortgagee Use of Professional Employer Organizations.” The purpose of this Mortgagee Letter is to clarify HUD requirements for mortgagees that contract with professional employer organizations and similar entities for human resources services. The guidance outlines permissible and impermissible uses of contractors, as well as the standard for use and required documentation for use of contractors. This Mortgagee Letter replaces previously issued guidance contained in HUD Handbook 4000.1 governing the use of contractors by FHA-approved mortgagees. The updated guidance is effective immediately. To read the full Mortgagee Letter, click here.