Can I become an FHA Mortgagee without getting Direct Endorsement (DE) approval?

Yes. Unconditional Direct Endorsement (DE) Authority is a supplemental authority which permits a Mortgagee to underwrite and close Title II Single Family Mortgages prior to submitting them for FHA insurance endorsement. An FHA-approved Mortgagee with Conditional Authority (has not entered or completed the Test Case phase) can originate FHA loans if sponsored by a Mortgagee with FHA Unconditional DE Authority. In this capacity, the sponsored Mortgagee would be operating as a Third Party Originator (TPO).

FHA allows originations between a TPO and an unconditional DE Mortgagee that meet the following:

1. The TPO must originate the loan.

2. The DE Mortgagee must underwrite the loan.

3. The loan can be funded and closed by the TPO if the TPO is an FHA approved Mortgagee.

4. The FHA-approved Mortgagee serving as the TPO on the loan will not be able to access the loan file in the FHA Connection (FHAC).

5. A relationship between a TPO and an unconditional DE lender must be registered in FHAC by the DE Mortgagee.

For additional information see Handbook 4000.1 Sections I.A.5.a.i.(A)(1) & (3); II.A.1.a.iii.(A)(1); II.A.1.a.iii.(B)(1)(b) available at

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.

Topic Number: KA-02192