FHA may withdraw the Direct Endorsement (DE) authority of any lender that demonstrates a pattern or practice of failing to comply with FHA underwriting guidelines or program requirements. This action is separate and apart from a Credit Watch Termination action. FHA may terminate a lender’s approval to participate in the DE Program in a particular jurisdiction or on a nationwide basis. FHA will provide the lender with written notice of the proposed withdrawal that identifies the grounds for the action and advises the lender of its right to an informal conference. FHA will expeditiously arrange for a conference where the lender may present information and argument in opposition to the proposed withdrawal. The lender may be represented by counsel. After consideration of the material presented, FHA will issue a decision in writing stating whether the proposed termination is rescinded, modified, or affirmed. The lender may appeal the decision to the Deputy Assistant Secretary (DAS) for Single Family Housing or his or her designee. A decision by the DAS for Single Family Housing or his or her designee constitutes final agency action.
For additional information see Handbook 4000.1 V.E.3.a.ii. at: