source:
  type: guide
  id: hud-4000-1-ii-b-dealer-loan
  authority: FHA Single Family Housing Policy Handbook 4000.1, Part II — b. Dealer
    Loan (05/09/2022)
  description: FHA Single Family Housing Policy Handbook 4000.1, Part II — b. Dealer
    Loan (05/09/2022).
  coverage_tier: operative
obligations:
- id: hud-4000-1-ii-b-dealer-loan-full
  canonical_id: hud-4000-1-ii-b-dealer-loan-full
  section: FHA Single Family Housing Policy Handbook 4000.1, Part II — b. Dealer Loan
    (05/09/2022)
  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 II — b. Dealer
      Loan (05/09/2022)
    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: 'b. Dealer Loan (05/09/2022) i. Definition A Dealer Loan process
      refers to a Loan where a Dealer assists the Borrower in preparing the credit
      application or otherwise assists the Borrower in obtaining the Loan from the
      Lender. This may include completing the loan application for the Borrower, and
      collecting any other documentation or information as required by the Lender
      that is necessary to support the lending decision. When the seller, contractor
      or supplier of goods and services does not assist the Borrower in obtaining
      the Loan from the Lender, then the transaction is not considered a Dealer Loan.
      ii. Standard The credit application, signed by the Borrower, is filled out by
      the Borrower with assistance from the Dealer, contractor, or third party that
      has a financial interest in the loan transaction. II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 1. Direct and Dealer Loan Process for Property Improvement
      Loan Program Handbook 4000.1 878 Last Revised: 11/26/2025 iii. Dealer Approval
      and Monitoring The Lender is responsible for approving Dealers prior to the
      Dealer’s participation in the Dealer Loan process. The Lender must complete
      an investigation of the Dealer and document the Findings for approval before
      the Dealer may begin originating Title I Loans through the Lender. (A) Dealer
      Eligibility for Participation in HUD Programs The Dealer must not be suspended,
      debarred, or excluded from participation in FHA programs as listed in an LDP,
      or SAM Excluded Parties List, or Credit Alert Verification Reporting System
      (CAIVRS). The Dealer, if acting as a Lender, must comply with all laws, rules,
      and requirements applicable to the loan transaction, including full compliance
      with the requirements applicable to the following under the purview of the Consumer
      Financial Protection Bureau (CFPB): • Truth in Lending Act (TILA) • Real Estate
      Settlement Procedures Act (RESPA) • Fair Credit Reporting Act (FCRA), and the
      Equal Credit Opportunity Act (ECOA), as implemented by Regulation B (12 CFR
      Part 1002) (B) Net Worth Requirement A Dealer must have and maintain a net worth
      of not less than $32,000 in assets acceptable to HUD. The following asset types
      and sources are not eligible for inclusion toward the minimum net worth: i.
      Any assets of the Dealer that are pledged to secure obligations of another person
      or entity. ii. Any asset due from either officers or stockholders of the Dealer
      or related entities, in which the Dealer’s officers and stockholders have a
      personal interest (unrelated to their position as an officer or stockholder).
      “Personal interest” refers to a relationship between the Dealer and a person
      or entity in which that specified person (e.g., spouse, parent, grandparent,
      child, brother, sister, aunt, uncle, or in-law) has a financial interest in
      or is employed in a management position by the Dealer. iii. Any investment in
      related entities in which the Dealer’s officer or stockholders have a personal
      interest unrelated to their position as an officer or stockholder or the Dealer.
      iv. That portion of an investment in joint ventures, subsidiaries, Affiliates
      and/or other related entities which is carried at a value greater than equity,
      as II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs
      1. Direct and Dealer Loan Process for Property Improvement Loan Program Handbook
      4000.1 879 Last Revised: 11/26/2025 adjusted. “Equity as adjusted” means the
      book value on the books of the related entity reduced by the amount of unacceptable
      assets carried by the related entity. v. All intangibles, such as goodwill,
      covenants not to compete, franchisee fees, organization costs, etc. except unamortized
      servicing costs carried at a value established by an Arm’s Length Transaction
      and presented in accordance with Generally Accepted Accounting Principles (GAAP).
      vi. That portion of an asset not readily marketable and for which appraised
      values are very subjective carried at a value in excess of a substantially discounted
      appraised value. vii. Any asset which is principally used for the personal enjoyment
      of an officer or stockholder and not for normal business purposes. (C) Business
      Experience of the Dealer All Dealers must have demonstrated business experience
      as a Property Improvement contractor or supplier of goods and services. The
      Lender must evaluate the Dealer on the basis of experience and approve only
      those Dealers that the Lender considers to be reliable, financially responsible,
      and qualified to satisfactorily perform their contractual obligations. (D) Approval
      Procedure for the Dealer Lenders must follow the procedures listed below to
      approve a Dealer to participate in the Title I Property Improvement Loan program.
      (1) Application Form A prospective Dealer must complete form HUD-55013, Dealer/Contractor
      Application: Title I Property Improvement and Manufactured Home Loans. The Lender
      must retain form HUD-55013 and all supporting documentation in the Dealer’s
      file for each Dealer. (2) Financial Statement The Lender must obtain and review
      the Dealer’s most recent annual financial statement to confirm that the Dealer
      meets HUD’s minimum net worth requirement. The financial statement need not
      be prepared by a licensed accountant, but the Lender must take into consideration
      that the financial statement must be prepared by someone who is independent
      of the Dealer and is qualified by education and experience to prepare such statements.
      II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT E. Title I Insured Programs
      1. Direct and Dealer Loan Process for Property Improvement Loan Program Handbook
      4000.1 880 Last Revised: 11/26/2025 (3) Credit Report A Lender must obtain and
      evaluate a commercial credit report on the dealership. The Lender must also
      obtain and evaluate an individual credit report on the Principal Owner(s) of
      the dealership to ensure that the owner(s) does not exhibit a disregard for
      credit. (4) Required Documentation of Approval Upon completion of the Lender’s
      thorough review and investigation of a Dealer, an authorized official of the
      Lender must sign the bottom of form HUD-55013 to document the Lender’s decision
      to approve the Dealer. The Lender must retain the approved application and all
      supporting documentation obtained during the application review. (5) Annual
      Renewal A Dealer is approved for a period of one year. To retain their approval
      status with the Lender, a Dealer must provide the Lender with a new form HUD-55013
      and their most recent financial statement. In addition to the steps outlined
      above for the initial approval, the Lender must also evaluate its experience
      with the Dealer during the prior year. This evaluation must address performance
      factors such as: • the Dealer’s approval and rejection rates; • the collection
      history for Loans purchased from the Dealer; and • the Dealer’s complaint resolution
      practices. (E) Monitoring the Dealer The Lender is responsible for supervising
      and monitoring each approved Dealer’s activities with respect to Loans insured
      under Title I. (1) Standard As part of the monitoring duties, Lenders are required
      to visit each approved Dealer’s place of business at least once every six months
      to review their Title I performance and compliance. Lenders must take prompt
      action to resolve any dealer deficiencies discovered. Lenders must verify that
      Title I Dealers/contractors meet and maintain a net worth in assets that is
      acceptable to the Secretary. Lenders must maintain a file on each approved Dealer
      which contains the executed dealer approval for and supporting documentation
      required under 24 CFR § 201.27(a)(2). II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 1. Direct and Dealer Loan Process for Property Improvement
      Loan Program Handbook 4000.1 881 Last Revised: 11/26/2025 (2) Requirements In
      addition to the initial and annual dealer approval reviews, the Lender must
      monitor each approved Dealer’s activities with respect to Loans insured by HUD
      on an ongoing basis addressing the following review components. (a) Quality
      of Borrower Applicants The Lender must monitor the quality of applicants submitted
      by the Dealer. If a Dealer’s rejection rate is too high, the Lender should meet
      with the Dealer to review the Dealer’s marketing and borrower qualification
      practices. (b) Quality of Required Loan Documentation The Lender must monitor
      the quality and completeness of the loan documentation submitted by the Dealer.
      (c) Dealer Advertising The Lender must monitor dealer advertising and other
      marketing material to ensure against misleading or false claims. The Lender
      must ensure that advertising and other marketing material does not include prohibited
      practices or convey the impression that the Dealer has a special relationship
      or affiliation with the federal government. The Dealer must include a fair housing
      poster in its marketing materials, and display in any office that deals with
      Borrowers and the general public. Lenders are prohibited from advertising or
      marketing in a way that restricts lending services to persons on a protected
      basis or that conveys exclusion of persons on a protected basis. Copies of dealer
      advertisements and other marketing materials issued by the Dealer must be maintained
      in the Dealer’s file with the other required documents. (d) Borrower Complaints
      against Dealers The Lender must monitor complaints received on Loans originated
      by the Dealer. Documentation for all complaints and their resolution must be
      maintained in the Dealer’s file. Particular attention should be focused on the
      quality of service offered, whether warranties are honored in a timely manner,
      and the general manner in which the Dealer resolves complaints and conducts
      their business. (e) Irregular Business Practices All credible allegations of
      irregularities (inducements, disallowed payments to the Borrower, false statements,
      etc.) must be promptly reported to either II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT
      E. Title I Insured Programs 1. Direct and Dealer Loan Process for Property Improvement
      Loan Program Handbook 4000.1 882 Last Revised: 11/26/2025 HUD’s Office of the
      Inspector General located in the nearest HUD Field Office or HUD’s Quality Assurance
      Division (QAD) at: U.S. Department of Housing and Urban Development Quality
      Assurance Division 451 Seventh St., SW Washington, DC 20410 (f) Material Changes
      of Dealer A Lender must require each approved Dealer to provide written notification
      of any material change in their trade name, places of business, type of ownership,
      type of business, or principal individuals who control or manage the business.
      The Dealer must furnish such notification to the Lender within 30 Days after
      the date of any material change. Upon discovery of any material change, the
      Lender must determine that the eligibility of the Dealer has not changed. (g)
      Dealer’s File The Lender is to maintain a separate file for each approved Dealer.
      The file is to include the initial application and documentation used for approval
      and any information regarding the Lender’s experience with Title I Loans involving
      the Dealer. Each file must consist of information regarding borrower Default
      rates, records of inspections of properties delivered and installed by the Dealer,
      copies of letters concerning borrower complaints and their resolution, material
      changes, copies of dealer advertisements and other marketing materials, and
      records of the Lender’s visits to the Dealer’s premises. (F) Termination of
      the Dealer A Dealer’s approval will be terminated if a Dealer does not satisfactorily
      perform its contractual obligations to Borrowers, does not comply with Title
      I program requirements, or is unresponsive to inquiries pertaining to Lender
      supervision and monitoring requirements. The Lender is required to notify HUD
      immediately with written documentation of the reason(s) for termination. A Dealer
      whose approval is terminated as a result of these circumstances may not be re-approved
      by a Lender without prior written approval from HUD. Notices of termination
      for cause and requests for permission to re-approve a terminated Dealer must
      be in writing and sent to HUD’s QAD. A Lender may, at its discretion, terminate
      the approval of a Dealer for other reasons at any time. II. ORIGINATION THROUGH
      POST-CLOSING/ENDORSEMENT E. Title I Insured Programs 2. Property Improvement
      Loan Program Handbook 4000.1 883 Last Revised: 11/26/2025 2. Property Improvement
      Loan Program The Title I Property Improvement Loan Program Origination/Processing
      through Post-closing and Insurance sections in this Handbook 4000.1 is applicable
      to all Property Improvement Loans insured under Title I of the National Housing
      Act. The Lender must fully comply with all of the following standards and procedures
      for obtaining FHA loan insurance on a Loan. HUD insures private Lenders against
      loss on Property Improvement Loans they make. Both large and small improvements
      can be financed. Loans on Single Family homes may be used for alterations, repairs
      and site improvements. Loans on multifamily structures may be used only for
      building alteration and repairs. A property owner may apply at any Lender that
      is approved to make Title I Loans.'
  judgment: false
