Annual reporting requirements for small financial institutions is being streamlined by the Department of Housing and Urban Development.
Currently, HUD requires all supervised Federal Housing Administration lenders and mortgagees to submit annual audited financial statements as part of the lender approval and recertification processes.
But HUD’s requirement is inconsistent with federal banking agencies, which don’t require audited financial statements for financial institutions with no more than $500 million in consolidated assets.
So HUD proposed a rule in April that would streamline reporting requirements for such thrifts and banks.
In lieu of annual audited financial statements, impacted institutions would be required to submit unaudited financial regulatory reports that they are required to submit to their regulators and align with the fiscal year ends.
Unaudited financial regulatory reports include consolidated or fourth quarter Report of Condition and Income, also known as a “call reports” (Federal Financial Institutions Examination Council forms 031 and 041); consolidated or fourth quarter Thrift Financial Reports; and consolidated or fourth quarter NCUA Call Reports (NCUA Form 5300 or 5310).
An exception would require audited financial statements if HUD determines that the supervised lenders or mortgagees pose a heightened risk to the FHA’s insurance fund.
On Tuesday, HUD issued the final rule.
Non-supervised mortgagees and large supervised financial institutions are not impacted by the final rule, which goes into effect on Oct. 17.
