The process of obtaining direct endorsement authority from the Federal Housing Administration has been made a little easier.
FHA Title II mortgagees that apply for direct endorsement unconditional authority must successfully complete a test-case phase.
During that phase, FHA must conduct a review of mortgages before they are closed, at which point it will issue a commitment.
FHA will then endorse the loan after it is closed.
Provided that the mortgagee has met the other approval requirements, the mortgagee is eligible for unconditional direct-endorsement authority once FHA has reviewed and found acceptable the requisite number of test case files.
But in Mortgagee Letter 2016-21, the Department of Housing and Urban Development said that loans can be submitted to FHA after closing during the test phase.
HUD originally sought feedback about the change from mortgagees and other interested parties in March 2013.
“The notice provided that given the certification required of lenders, the shift in the time frame for review may in fact result in enhanced lender accountability; that is, the lender will place more emphasis on ensuring that their underwriting staff is sufficiently trained prior to requesting direct endorsement authority,” HUD said in a Federal Register filing Wednesday. “The notice further provided that properly trained underwriters will help to increase the number of loans that are found to be acceptable, resulting in an even higher percentage of loan files that meet FHA policies and guidelines.”
The updates become effective for FHA mortgagees approved for
the Direct Endorsement Unconditional Authority Test Case process on or after April 1, 2017.
