What is a Sponsor/Sponsored Third Party Originator relationship and how is it set up?

A Sponsor/Sponsored Third-Party Originator (TPO) Relationship is one in which a lender with Direct Endorsement (DE) Authority (acting as the “sponsor”) permits another entity to act as an originator and originate mortgages on their behalf.

Only a lender with DE Authority may use sponsored TPOs.

The lender must ensure its sponsored TPO does not purchase or hold FHA-insured mortgages and may not close mortgages in their own name.

The lender may permit its sponsored TPO to purchase or hold FHA-insured mortgages and close in their own name, if the TPO is also an FHA-approved lender.

A lender with Unconditional DE authority must register a sponsored TPO on the Sponsored Originator Maintenance screen in FHA Connection.

The FHA Connection Guide is available at https://entp.hud.gov/clas/index.cfm.

For additional information see Handbook 4000.1 I.A.5.a.v at http://portal.hud.gov/hudportal/HUD?src=/program_offices/administration/hudclips/handbooks/hsgh.