TOC FHA DE Manual
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FHA Direct Endorsement Underwriting
Table of Contents
- Need to promote a senior FHA processor to become your FHA Direct Endorsement Underwriter?
- Are you an individual needing Direct Endorsement Training to qualify for a new position?
- Are you already the DE and like a faster way to double check information before you sign off?
If the answers are yes, then Capstone's "FHA Direct Endorsement Underwriters Survival Hand Book" will fully prepare you with the knowledge, guidelines and procedures for effectively performing your duties and responsibilities as a FHA Direct Endorsement Underwriter.
HOW TO BECOME A DIRECT ENDORSEMENT UNDERWRITER
- Guidelines
- Qualifications
- Responsibilities
UNDERWRITING THE FHA PROPERTY
- Analyzing the FHA appraisal
- Handling Valuation Conditions (VCs)
- Repair Inspections
- Conditional Commitments Completion
Appraisal Analysis
- Appraisal review checklist
- Determining acceptable comparables
- Red Flags
FHA REQUIREMENTS FOR NEW CONSTRUCTION PROPERTIES
- Obtaining condominium and PUD approvals
- Acceptable FHA new construction properties
- Getting Builders FHA Approved
- Reviewing Plans & Spec's
Underwriting The Credit
- Technical review and fraud control
- Handling conditions
- Analyzing the credit
- Applying judgment to underwriting
- Completing the Mortgage Credit Analysis Worksheet
- Firm Commitment
DEVELOPING A QUALITY CONTROL PLAN
- Guidelines for setting up and maintaining a Quality Control Plan
- Training staff in quality control$quality control checklist
TABLE of Contents
SECTION 2:
HOW TO BECOME A DIRECT ENDORSEMENT UNDERWRITER
2-1 Guidelines for Becoming an FHA Direct Endorsement Underwriter
2-2 Qualifications for Becoming a DE Underwriter
2-3 Responsibilities
2-4 Underwriting Procedures, Quality Control Plan
2-5 Conditional Approval - Review of 15 Cases, Unconditional Approval, Addition of New Underwriters, Loss of Underwriters
2-6 Hiring an Approved DE Underwriter, Responsibilities for Underwriting the FHA Property and Credit
SECTION 3:
UNDERWRITING THE FHA PROPERTY
3-1 Handling Property Considerations
3-2 Repair and Inspection Requirements for Existing Properties
3-4 Site Considerations
3-9 FHA Requirements for Individual Wells and Septic Tanks
3-14 Required FHA Disclosures and Forms Relating to the Property
3-24 Reviewing the Information on the Back of the Conditional Commitment
3-28 Completing the Conditional Commitment
3-35 Prohibition of Property Flipping
3-38 Second Appraisal Requirements
3-40 Adoption of Market Conditions Addendum
3-43 Prohibition of Mortgage Brokers and Commission-Based Lender Staff from the Appraisal Process
3-47 Appraisal Portability
3-49 Reconsideration Actions
SECTION 4:
APPRAISAL ANALYSIS
4-1 Reviewing and Underwriting the Appraisal
4-2 Frequently Asked Questions Relating to the Appraisal
4-6 Appraisal Review Checklist B Red Flags
4-9 Explanation of Red Flags Found on Appraisal Review Checklist
4-20 Appraisal Terminology
4-26 Uniform Residential Appraisal Report
4-32 Reviewing and Analyzing the Appraisal
4-32 Reviewing the Subject Section
4-32 Reviewing the Contract Section
4-33 Reviewing the Neighborhood Section
4-42 Reviewing the Site Section
4-47 Reviewing the Improvements Section
4-52 Reviewing the Sales Comparison Approach Section
4-59 Reviewing the Reconciliation Section
4-60 Reviewing the Cost Approach Section
4-63 Using the Income Approach for Rental Properties
4-65 Reviewing the PUD Information Section
4-66 Individual Condominium Unit Appraisal Report
4-73 Small Residential Income Property Appraisal
4-81 Manufactured Home Appraisal Report
SECTION 5:
FHA REQUIREMENTS FOR NEW CONSTRUCTION PROPERTIES
5-1 What the DE Underwriter Needs to Know About New Construction Properties
5-2 Construction-Permanent Mortgage Program
5-7 Acceptable Communities
5-8 Obtaining Condominium Approval
5-17 Condominium Project Approval Matrix
5-18 Lender Certification to Condominium Requirements
5-19 Requirements for Builders Offering FHA Financing
5-20 Acceptable FHA New Construction Properties
5-21 Preparing the Builder Certification Form
5-26 Plans & Specs Provided by the Builder
5-27 New Construction Review Sheet
5-28 Early Start Letters
5-31 Compliance Inspection Reports & Change Order Requests
5-40 Documents that Must be Signed or Provided by the Builder Prior to or at Closing
5-42 Warranty of Completion of Construction
5-43 Subterranean Termite Soil Treatment Builder=s Guarantee
5-44 New Construction Subterranean Termite Soil Treatment Record
5-45 Mortgagor=s Homeowner=s Warranty Certification
5-46 Using a Master Appraisal Report
SECTION 6:
UNDERWRITING THE CREDIT
6-1 The Underwriting Objective
6-2 When the Loan Must be Manually Underwritten
6-4 FHA Compensating Factors
6-6 Underwriter Decisions
6-7 Underwriting the Credit Package
6-8 Step #1 - Determining the Credit worthiness of the Borrowers
6-9 1. Source of Funds to Close
6-17 Analyzing the Borrowers= Source of Funds to Close
6-19 2. Income Stability
6-29 Analyzing the Borrowers= Income Stability
6-31 3. Overall Credit Rating
6-32 Credit Report Requirements (Traditional)
6-33 Credit Report Requirements (Non-Traditional)
6-36 Derogatory Credit Issues
6-39 Analyzing the Borrower=s Overall Credit Rating
6-43 4. Debt-to-Income Ratios
6-43 Monthly Liabilities
6-46 Analyzing the Borrowers= Debt-to-Income Ratios
6-49 5. Proposed Housing Payment is Increasing Substantially Over Current Housing Payment
6-51 Step #1 - Determining Credit worthiness - Let's Sum It Up
SECTION 7:
PERFORMING A TECHNICAL REVIEW
7-1 Step #2 - Performing a Technical Review
7-2 FHA Guidelines DE Underwriters Must Know
7-3 Determining the Maximum Loan-to-Value
7-5 FHA Maximum Loan Limits
7-8 FHA Mortgage Insurance Premium (MIP)
7-14 Basic Eligibility for an FHA Loan
7-17 Maximum Seller Contributions
7-19 What May Be Financed into the Loan on Purchase Transactions
7-21 Carefully Review the Sales Contract
7-23 Lead-Based Paint Disclosure
7-24 Identity-of-Interest Transactions
7-25 FHA Guidelines for Rental Properties
7-29 Reviewing the Good Faith Estimate - Explanation of Certain Settlement Costs
7-31 Sample Good Faith Estimate
7-32 Sample FHA Loan Underwriting and Transmittal Summary
7-35 Other Items Shown on the FHA Loan Underwriting and Transmittal Summary
7-36 The FHA Connection - Access via the Internet
7-41 Sample Case Number Assignment Sheet
7-38 Home Mortgage ADP Code Chart
7-41 HUD=s Credit Alert Interactive Voice Response System (CAIVRS)
7-42 Limited Denial of Participation (LDP) List
7-44 List of Parties Excluded from Federal Procurement and Nonprocurement Programs
7-45 Reviewing the Loan Application
7-46 Loan Application Review Checklist
7-48 Reviewing the Uniform Residential Loan Application
7-64 Final Review of the Loan Application
7-65 Additional FHA Disclosures
7-66 Informed Consumer Choice Notice
7-69 Important Notice to Homebuyers
7-71 Notice to Homeowner Regarding Assumptions
7-72 For Your Protection: Get a Home Inspection
7-74 Reviewing and Signing the HUD/VA Addendum
7-79 Closing Conditions - Prior to Closing Conditions
7-82 At Closing Conditions
7-84 DE Underwriter FHA Loan Conditions Sheet
7-85 Closer to Clear: Required Closing Documentation
7-87 Underwriting an FHA Refinance Transaction
7-88 FHA Refinance Programs
7-89 Streamline Refinances
7-90 Guidelines for All Streamline Refinance Transactions
7-99 Maximum Loan Amount for Streamline Refinances Without an Appraisal
7-100 Maximum Loan Amount for Streamline Refinances With an Appraisal
7-101 Credit Qualifying Streamline Refinances
7-102 FHA MIP on Refinances
7-103 Performing a Technical Review on a Streamline Refinance
7-105 Streamline Refinance Case Study
7-118 Regular No Cash-Out Refinance
7-121 Performing a Technical Review on a Regular No Cash-Out Refinance
7-122 No Cash-Out Case Study
7-133 Cash-Out Refinances
7-136 Performing a Technical Review on a Cash-Out Refinance
7-137 Cash-Out Refinance Case Study
7-148 Step #3 - Fraud Detection - Identifying Red Flags
7-155 Documentation Review Checklists and Worksheets:
- Appraisal Review Checklist
- Loan Application Review Checklist
- Documentation Review Checklist
- FHA Refinance Maximum Mortgage Worksheet
- DE Underwriter FHA Loan Conditions Sheet
- Closer to Clear - Required Closing Documentation
REFERENCE MANUALS
In order to perform your job effectively as a Direct Endorsement Underwriter, it will be necessary to be familiar with the information contained in the manuals listed below. Some of these manuals have been around for quite a few years and are probably outdated, however, there is still a wealth of information to be found.
These manuals are available on the HUD website at www.hudclips.org.
4000.2 REV-3 - Mortgagee=s Handbook, Application through Insurance - This Handbook has been replaced by Handbook 4155.2
4000.4 REV-1 - Mortgagee=s Guide to the Direct Endorsement Program - This Handbook has been replaced by Handbook 4155.2
4020.1 HUD-FHA Underwriting Analysis
4060.2 Mortgage Review Board Handbook
4070.1 Construction Complaints and Section 581(a) and (b)
4075.12 Central Water and Sewerage Systems
4115.1 Administrative Instructions and Procedures
4150.1 Valuation Analysis for Home Mortgage Insurance
4155.1 Mortgage Credit Analysis for Mortgage Insurance on
One- to Four-Family Properties - Updated version effective May 9, 2009
4155.2 Lender=s Guide to Single Family Mortgage Insurance Processing - This Handbook replaces three Handbooks: 4000.2 REV-3, Mortgagees= Handbook, Application through Insurance; 4000.4 REV-1, Single Family Direct Endorsement Program; and
4165.1 REV-2, Endorsement for Insurance for Home Mortgage Programs (Single Family)
4160.1 Reconsideration (Before Endorsement) for Home Mortgage Insurance
4165.1 REV-2, Endorsement for Insurance for Home Mortgage Programs (Single Family) This Handbook has been replaced by handbook 4155.2
4170.1 Reconsideration (After Endorsement) for Home Mortgage Insurance
4190.1 Single Family Reports and Forms Catalog
4240.4 Rehabilitation Home Mortgage Insurance, Section 203(k)
4310.5 Property Disposition Handbook - One- to Four-Family Dwellings
4330.1 Administration of Insured Home Mortgages
4910.1 Minimum Property Standards for Multifamily Housing
4930.3 Permanent Foundations Guide for Manufactured Housing
4940.2 Minimum Design Standards for Community Water Supply Systems
4940.3 Minimum Design Standards for Community Sewerage Systems
4950.1 Technical Suitability of Products Program Processing Procedures
24CFR Part 203 Mutual Mortgage Insurance and Rehabilitation Loans
24CFR 203.43f Eligibility of Mortgages Covering Manufactured Homes
24CFR 3280 Federal Manufactured Home Construction and Safety Standards
518(a) National Housing Act B Financial Assistance for Correction of a
Structural Defect
2225.6 Records Disposition Management: HUD Records Schedule
PAGE NO. TOPIC
SECTION 8:
DEVELOPING A QUALITY CONTROL PROGRAM
8-1 What is Quality Control?
8-4 Company Policy Regarding Issues on Quality Control and Fraud Prevention
8-7 Let=s Get Down to the Basics of a Good Quality Control Program
8-8 You Need to Establish a Written Quality Control Plan
8-9 Primary Objectives of a Quality Control Plan
8-10 Staffing of Employees - The Screening Process
8-12 Select a Quality Control Coordinator
8-15 Training of Employees
8-16 Staff Meetings
8-17 Handling Violations
8-18 Writing the Quality Control Plan - Purpose
8-19 Organization
8-20 Audit Procedures
8-23 Specific Quality Control Requirements
8-25 Selecting Loans for Audit
8-26 Compliance, Documents, and Income/Employment Review
8-28 Legal Document Review
8-29 Income/Employment Review
8-30 Branch Office or Correspondent Visits
8-33 Closed Loan Audit
8-35 Audit Results
8-36 Use of Outside Firms to Perform Quality Control Reviews
8-37 Quality Control Review Forms
8-38 Checklist of Required Federal Disclosures
8-41 Audit Report
8-42 Branch Office and Correspondent Checklist
8-43 Quality Control Review Sheet
