A Limited Liability Company (LLC) is an incorporated legal Entity created under applicable state law that combines certain legal and tax attributes of corporations and partnerships. The LLC must:
consist of two or more members, unless its single member is a corporation or LLC consisting of two or more persons or members;
have a minimum term of existence of 10 years from the date of application;
provide for succession;
authorize continuance in the event of the withdrawal or death of a member; and
specify that the LLC will not terminate until all FHA-insured mortgages have been transferred to another approved mortgagee.
A Series LLC is a specific type of LLC that is composed of separate membership interests, which are divided into individual series.
The Series LLC must comply with all requirements for approval of an LLC.
The Series LLC must be organized in accordance with state law that does not conflict with FHA requirements. The Series LLC’s operating agreement must stipulate that:
no series may participate in FHA programs unless the approved Mortgagee owns 100 percent of the membership interests in that series; and
the approved Mortgagee remains fully liable for the debts, liabilities, obligations and expenses of any and all series that participate in FHA programs.
For additional information see Handbook 4000.1 I.A.3.c.i.(A)(2)-(3) at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh.