source:
  type: guide
  id: hud-4000-1-i-j-use-of-contractors
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part I — j. Use of
    Contractors (09/26/2022)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part I — j. Use of
    Contractors (09/26/2022).
  coverage_tier: operative
obligations:
- id: hud-4000-1-i-j-use-of-contractors-full
  canonical_id: hud-4000-1-i-j-use-of-contractors-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part I — j. Use of Contractors
    (09/26/2022)
  type: do
  tags:
  - regulator-direct
  - fha
  - hud-handbook
  - corpus-expansion
  - tier-operative
  primary_source:
    tier: 1
    authority: FHA Single Family Housing Policy Handbook 4000.1, Part I — j. Use of
      Contractors (09/26/2022)
    source_class: hud-handbook
    source_url: https://www.hud.gov/hud-partners/single-family-handbook-4000-1
    snapshot_id: 8c03836f77f317e1
    fetched_at: '2026-05-23T00:28:40Z'
    content_hash: sha256:411430f29b13f9b54a2ebb0e6f6e7087ecd2b90d0da22eb0c8c792eaa2d7d0df
    paragraph_quote: 'j. Use of Contractors (09/26/2022) i. Permissible Use The Mortgagee
      may use contract support for administrative, human resources, and clerical functions
      that include: • clerical assistance; • mortgage processing (typing of mortgage
      documents, mailing and collecting verification forms, ordering credit reports,
      and/or preparing for endorsement and shipping Mortgages to the Purchasing Mortgagee);
      • ministerial tasks in mortgage servicing (processing of a foreclosure action,
      preservation and protection, and/or tax services); • legal functions; • Third
      Party Verification; • Quality Control; and • human resources services (payroll
      processing, payment of employment taxes and the provision of employee benefits)
      provided by a professional employer organization or a similar entity. A Supervised,
      Nonsupervised, or Government Title I Lender may use an agent to service Title
      I Loans for which it is the holder. I. DOING BUSINESS WITH FHA A. FHA Lenders
      and Mortgagees (09/20/2021) 6. Post-approval Operations Handbook 4000.1 54 Last
      Revised: 11/26/2025 Third Party Verification (TPV) refers to a process through
      which a Mortgagee may use a third party vendor to independently verify information
      in a loan application or otherwise required for loan approval. TPV can be used
      to verify employment, income, assets, credit, and occupancy. ii. Impermissible
      Use The Mortgagee may not contract with any entity or person that is suspended,
      debarred, under a Limited Denial of Participation (LDP), or who is otherwise
      excluded from participation in FHA transactions. A Mortgagee must not contract
      out management or underwriting functions. iii. Standard The Mortgagee must ensure
      that the contracting out of certain functions does not and will not materially
      affect underwriting or servicing decisions or otherwise increase financial risk
      to FHA. The Mortgagee remains responsible for the quality of its FHA-insured
      Mortgages and must ensure that its contractors fully comply with all applicable
      laws and FHA requirements. The Mortgagee may own or have an ownership interest
      in a separate business entity that offers such contract services. Employees
      covered by a contract for human resources services described above must remain
      under the direct supervision and control of the Mortgagee. FHA considers the
      Mortgagee, the employer with respect to all activities related to FHA business,
      and the Mortgagee retains full responsibility and legal liability for the actions
      of employees covered by a contract for human resources services with regard
      to all HUD regulations and requirements. iv. Required Documentation The Mortgagee
      and its contractor must have a valid contractual agreement in place that specifies
      the roles and responsibilities of each party.'
  judgment: false
