During 2013 the owners of the mortgage company started a new LLC. The new LLC was formed for the purpose of purchasing an office building and then renting that office building to the mortgage company. For GAAP purposes the books of the mortgage company and the new LLC have been consolidated as the new LLC is considered to be a VIE (variable interest entity). If the lender submits consolidated financial statements, we are wanting to know if the assets of the new LLC are considered to be unacceptable assets on the Schedule of Adjusted Net Worth. In other words, should the adjusted net worth just be the mortgage company stockholders' equity (as of 12/31/13 the mortgage company book's do not include any unacceptable assets)?

Specifically, we are asking if the reporting should be only that of the mortgage company or if it should be on the consolidated basis used for GAAP reporting. The company considers the LLC that owns the building as a vital part of its operations and only placed the building in a separate LLC for tax purposes. The LLC ownership is the same as the ownership of the mortgage company (both entities are owned 50% by each owner).


Filing should include all the assets and net assets of the consolidated entity, or those just of the mortgage company for the FHA filing?