Letter 32: Branch Banking; FNMA Satellite Loan Program

It has come to my attention that the Federal National Mortgage Association is offering a satellite loan program under which lenders who have not been approved by FNMA may participate in the secondary mortgage market through FNMA-approved lenders. Under this program the lender which is not approved by FNMA, 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 FNMA-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 benefit from secondary mortgage market arrangements to participate in FNMA 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 FNMA approved lender.

Bkg. Ltr. #32, January 15, 1980, Commissioner Mildenberg