Which authority approves lenders to offer FHA loans?

The correct answer is the Federal Housing Administration (FHA). The FHA is a part of the U.S. Department of Housing and Urban Development (HUD) and is responsible for insuring mortgages, which encourages lenders to offer loans to borrowers with lower credit scores or smaller down payment amounts.

By approving lenders to participate in the FHA loan program, the FHA sets standards that lenders must meet to ensure they are providing loans that comply with federal guidelines. This includes evaluating the lender's financial stability, their ability to underwrite loans, and their adherence to FHA policies. Through this approval process, the FHA helps increase access to homeownership for many Americans.

Other options do not hold the authority to approve lenders for FHA loans. The Federal Reserve Bank is primarily involved in monetary policy and regulating banks but does not approve specific lenders for FHA loans. The Hawaii Real Estate Commission manages real estate licensees in Hawaii and does not oversee mortgage lending practices or FHA loan approvals. Lastly, while the Department of Housing and Urban Development oversees the FHA as a whole, it is the FHA itself that directly approves lenders.