Letter 32

​​​Branch Banking; Federal National Mortgage Association Satellite Loan Program​

It has come to my attention that t​he Federal National Mortgage Association is offering a satellite loan program under which lenders who have not been approved by the Federal National Mortgage Association may participate in the secondary mortgage market through the Federal National Mortgage Assoication-approved lenders. Under this program the lender which is not approved by the Federal Nantional Mortgage Association, referred to as a "satellite mortgage organization," may (1) accept mortgage applications from prospective borrowers, (2) order or receive appraisal reports directly from the approved lender's Federal National Mortgage Association-accepted appraiser, (3) order or receive the prospective borrower's credit documentation directly from the original sources, (4) inspect property offered as security and (5) close the loan either in its own name or the approved lender's name.

While this Office encourages banks who can bene
fit from secondary mortgage market arrangements to participate in the Federal National Mortgage Association sponsored real estate loan program, bank management is reminded that acting as an agent for another bank to close loans in that bank's name constitutes branching under the Wisconsin banking laws. Consequently, while a bank may participate as a satellite mortgage organization and close real estate mortgage loans in its own name, it may not close these loans in the name of another Federal National Mortgage Association-approved lender.

Banking Letter 32, January 15, 1980, Commissioner Mildenberg​