FHA Approval

FHA correspondent lenders across the country are taking a look at their options for moving forward under HUD’s new lender approval criteria. As we talk with banks, credit unions, lenders and broker we are hearing a variety of opinions that range from ‘great I can’t wait to stop the audited financials’ to ‘how do I elevate my operation to handle DE authority’. The most aggressive consideration is to take it all the way, sell the assets and merge with a bank who already has underwriting and post closing operations. Here are some critical points to consider as you review your FHA options: 1) It’s not just about additional net worth to get Direct Endorsement underwriting status. If cash is all you need, there are companies that can find this for you. We recommend Mortgage Banking Solutions if you need capital. 2) Are you using your loan origination system properly? If you have been using your LOS as a glorified typewriter/printer, you are in for a lot of problems when you take on FHA insuring. FHA insuring management requires good status or milestones throughout the entire loan process that all staff follow religiously. You’ll need your own post closing reports. The investor error reports will not be enough to keep you on track and out of risk for penalties. 3) How will you get a qualified underwriter? Will you be growing your own or trying to hire a high priced DE underwriter. By the way, don’t forget that DE authority runs with the lender and not the individual. Just because someone has an FHA ID number does not mean they are a good underwriter. A processor with 3 years of FHA experience at a high volume might be worth more than a DE underwriter who hasn’t seen an FHA for 3 years. 4) Have you determined the additional overhead costs and adjusted your FHA cost per loan and pricing accordingly? 5) If merger is on your mind, then be sure you have a third party assess the relationship and operational differences. Would you get married to someone before have your best friend or parents check them out? We have helped many companies work through the assessment of their operations, find the right path and successfully implement FHA underwriting, insuring and delivery. We sit on the front lines with your staff, at their desk like no other company can. We engage the entire team in designing a process that works for your systems, experience and most importantly your customer.