Direct Endorsement Underwriters

HUD Handbook 4000.1 >> Direct Endorsement Underwriters

Editor’s note: This section of the FHA Single Family Housing Policy Handbook covers the eligibility requirements for Direct Endorsement (DE) Underwriters who participate in the program. The following information was adapted from HUD Handbook 4000.1 and is effective 03/14/16.

a. Program Overview

Effective for case numbers assigned on or after March 14, 2016

The Direct Endorsement (DE) Underwriter serves as the Mortgagee’s subject matter expert for underwriting and must ensure compliance with all underwriting requirements in Origination through Post Closing/Endorsement for all manually underwritten Title II Forward Mortgages. Underwriting responsibilities include, but are not limited to, the following:

  • calculation of maximum mortgage amounts;
  • underwriting the Property; and
  • underwriting of the Borrower.

The DE Underwriter must also ensure compliance with all requirements for Underwriting the Property for all Title II Forward Mortgages underwritten using the Technology Open To Approved Lenders (TOTAL) Mortgage Scorecard.

The DE Underwriter also serves as the Mortgagee’s subject matter expert on the financial assessment requirements in Origination through Post Closing/Endorsement for all Home Equity Conversion Mortgages (HECM). Financial assessment requirements include, but are not limited to, the following:

  • underwriting of the Property;
  • analysis of the Borrower’s credit history;
  • analysis of the Borrower’s property charge payment history;
  • calculation of residual income; and
  • determination of the need for and the amount of a Life Expectancy (LE) Set-Aside.

b. DE Underwriter Eligibility

i. Eligibility Requirements

The DE Underwriter must meet the following requirements:

  • have a minimum of three years full-time experience reviewing credit applications and one- to four-unit property appraisals, within the past five years; or,
  • have a minimum of two years full-time experience reviewing credit applications and one- to four-unit property appraisals, within the past three years, combined with an additional three years of such full-time experience within the past ten years; and
  • be a full-time employee of a single Mortgagee; and
  • be authorized to bind the Mortgagee in matters involving origination of mortgages.

ii. Ineligible Participants

The DE Underwriter must not be:

  • listed on the General Services Administration’s (GSA) System for Award Management (SAM) or currently subject to a suspension, debarment, Limited Denial of Participation (LDP), or other restriction imposed under Part 24 of Title 24 of the Code of Federal Regulations, Part 180 of Title 2 of the Code of Federal Regulations as implemented by Part 2424 of Title 2, or any successor regulations to such parts, or under similar provisions of any other federal or state agency;
  • under indictment for, or have been convicted of, an offense that reflects adversely upon the underwriter’s integrity, competence or fitness to meet the responsibilities of a DE Underwriter;
  • subject to any Unresolved Findings made specifically against the underwriter as the result of any HUD or other governmental investigation or audit;
  • engaged in business practices that do not conform to generally accepted practices of prudent underwriters or that demonstrate irresponsibility;
  • convicted of, or have pled guilty or nolo contendere to, a felony related to participation in the real estate or mortgage industry:
    • during the seven-year period preceding the date of registration in FHA Connection (FHAC); or
    • at any time preceding the date of registration in FHAC, if such felony involved an act of fraud, dishonesty, or a breach of trust, or money laundering; or
  • in violation of provisions of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act) (12 U.S.C. ยง 5101 et seq.) or its equivalent under state law, including all Nationwide Mortgage Licensing System and Registry (NMLS) requirements.

Additionally, the DE Underwriter must not have Dual Employment or Conflicts of Interest.

c. Mortgagee’s Approval Process

The Mortgagee must register each of its underwriters in FHAC. By registering an underwriter in FHAC, the Mortgagee certifies that they meet the necessary qualifications described above.

d. Post-Approval Requirements

The Mortgagee must complete a series of annual certification statements that include the Mortgagee’s review of underwriter compliance with eligibility requirements.