Underwriting FHA in 2011

The current shortage of underwriters has made FHA Direct Endorsed (DE) underwriters a hot commodity as lenders continually seek for underwriters with a CHUMS ID #. Why are DE underwriters so sought after in today’s mortgage market? Here are some of the key reason that the CHUMS ID # has become good as gold: 1) The underwriter has prior FHA experience 2) Only DE underwriters can review and “sign off” on an FHA appraisal 3) Most DE underwriters have FHA training and have complete test cases with HUD or their employer 4) FHA loan volume continues to grow 5) The underwriter is used to FHA Connection and can navigate through fairly easily 6) Many FHA “correspondents” have made the move to mortgage banker and they need a DE underwriter on staff Many lenders are finding that finding DE underwriters is a challenge and they have been converting moving conventional staff members (processors and underwriters) into the government lending department. What is the key to facilitating the transition to government lending? Practical training is the solution. FHA guidelines is a small component. A major component of training new staff is to insure they understand FHA’s (HUD) expectations in risk management. One of my favorite training classes is FHA Basic and Advanced Case Studies in which Indecomm-Mortgage U brings FHA to life. Indecomm-Mortgage U covers the basics as well as helping students understand what FHA really expects… in other words “Do what HUD wants, not what you read”. FHA allows for numerous “exceptions” which lenders often used without a second thought. Some of those loans are delinquent and HUD is asking to be indemnified due to improper use of guidelines. A DE underwriter that understand what HUD wants is truly worth their weight in gold. The cost of indemnification is far greater than the cost of gold. Sam Chrome is an instructor and consultant at Indecomm-Mortgage U specializing in mortgage lending risk management and compliance.