On Monday, November 28, the U.S. Department of Housing and Urban Development (HUD) issued Mortgage Letter 2016-18.

According to a release by the National Association of Professional Employer Organizations (NAPEO), this letter reverses Mortgage Credit Circular 4-92 to allow PEOs to provide services to Federal Housing Administration (FHA) approved home mortgage lenders. The letter specifically allows mortgage lenders to use outside contractors for “human resources services (payroll processing, payment of employment taxes and the provision of employee benefits) provided by a professional employer organization or a similar entity.

Since 1992, HUD has prohibited PEOs from contracting with FHA-approved lenders. In 1995, an internal HUD memo reconfirmed the prohibition on leasing of decisional employees, and also indicated a position that it was “imprudent” for an FHA-approved lender to lease any employees. In 2008, HUD sent another letter to NAPEO’s outside counsel reaffirming the HUD prohibition against the use of PEOs/employee leasing companies by FHA-approved lenders. With the release of Mortgage Letter 2016-18, HUD has reversed a nearly 25 year old policy that was based on an erroneous and outdated view of the PEO industry.

This policy reversal by HUD would not have been possible without the lobbying efforts of TriNet. TriNet’s internal and external lobbying team met with HUD officials on multiple occasions and worked directly with HUD leadership to change this policy. Their persistence and hard work were key in this successful effort. In addition, NAPEO sent a letter at the same time TriNet was meeting with HUD laying out the case for repealing this policy directive, reinforcing their lobbying efforts.

The reversal of the HUD prohibition on using PEOs by mortgage brokers opens a significant market for PEO services, and is a substantial federal lobbying victory for the PEO industry.

Mortgage brokers and companies providing professional brokerage services are now able to reap the benefits of a PEO that thousands of other businesses across the USA have been doing for many years.

image courtesy of Timothy Vollmer at Flickr

SOI Sold – Trinet Continues PEO Acquisitions

Strategic Outsourcing Inc. known as SOI and one of the nations largest Professional Employer Organizations (PEO) has been purchased by Trinet. According to information from SOI, they process over $2.5 billion in payroll for over 62,000 worksite employees. SOI was founded by Steven Mariano the late 1990s and was later sold to Union Planters Bank which later became Regions Bank. Executives at SOI included CEO Carl Guidice, President Gil Aleman, Sales EVP Eldridge Bravo and COO Anthony Dannon. Mr. Danon was formerly the VP of finance at Staff Leasing, Inc. a publically traded PEO that later became Gevity and was later taken private when purchased by Trinet. SOI has headquarters in Charlotte, North Carolina. Trinet may now become the nation’s largest PEO at 104,000 worksite employees following the spring acquisition of Accord HR in Oklahoma City Oklahoma. According to information from Alphastaff, SOI had 2.9% of the PEO market in 2010 and Trinet had 1.9% of the PEO market.

Impacts for SOI Clients

No information has yet been released about the merge the SOI operations with Trinet or to leave SOI as in independently operating Professional Employer Organization. Financial terms of the acquisition were not disclosed; however initial information indicates that the sale of SOI will not be conducted as an asset sale, and that SOI will remain intact as an operating entity. SOI has been a participating PEO at StaffMarket since April of 2005 and has been one of the most aggressive PEOs in the Southeastern United States, particularly in Florida, Georgia and North and South Carolina.

SOI clients have accessed health insurance primarily through the SOI group plan with Aetna. Since Trinet also uses Aetna plans, there should be minimal impact to SOI clients if a merge with Trinet is contemplated. More information provided by Alphastaff and Crain Communication is available here.PEO Size and Market Share Rankings for 2010

PEO Mergers and Acquisitions Continue
AccordHR purchased by Trinet

On April 26, 2012 San Leandro, CA based Trinet announced the acquisition of Oklahoma City based AccordHR. Both companies are privately held and terms of the sale were not disclosed. Oklahoma based AccordHR was founded in 1992 by Dale Hageman and grew to be one of the largest PEOs in Oklahoma. In 1995, AccordHR joined forces with John Jones in Tampa, Florida where a separate PEO was established (Accord of Florida) with Mr. Jones acting as president. According to the State of Florida, Accord HR has twelve active operating companies in Florida. In Oklahoma, Accord Human Resources has thirteen operating companies.

Trinet Press Release:

According the Trinet press release announcing the acquisition:

Things to consider if your PEO was just sold.