How does a Mortgagee obtain unconditional Direct Endorsement approval?

After a Mortgagee is approved by FHA as a Title II Supervised, Nonsupervised or Government Mortgagee, they can apply for Direct Endorsement (DE) authority. FHA’s DE Program permits a Mortgagee to underwrite Title II Single Family Mortgages or FHA’s Home Equity Conversion Mortgages (HECM) without FHA’s prior review and submit them directly for FHA insurance endorsement. 
 
The Mortgagee must submit a written application for Unconditional DE authority to the jurisdictional Homeownership Center (HOC) for the state where the Mortgagee’s home office is located.  The application must contain a letter signed by a Corporate Officer requesting entry into the Test Case phase that contains the Mortgagee’s home office 10-digit FHA Lender ID and all underwriters’ names and four-character FHA-assigned identification numbers issued to these underwriters.  Separate applications are required for Title II forward mortgage authority and HECM authority.
 
If the Mortgagee meets the requirements for conditional authority and submits the required documentation, the Mortgagee will receive a Test Case phase approval letter from the HOC.  The HOC will also provide reference materials and a list of the specific requirements that must be met to obtain Unconditional DE authority.  The Mortgagee must participate in an in-person or telephone entrance conference with the HOC before it will be eligible to submit Test Cases. 
 
The Mortgagee must submit Test Cases to FHA for review during the Test Case phase.  FHA will review these cases for compliance with FHA’s origination, underwriting, and closing requirements.  The Mortgagee must receive a minimum of 15 Firm Commitments for forward mortgage authority or 5 Firm Commitments for HECM authority within a period of 12 consecutive months following the date of the entrance conference.
 
After the Mortgagee successfully completes the required Test Cases, FHA will grant the Mortgagee approval for Unconditional DE authority.  The Mortgagee will receive an approval letter and may then begin submitting Mortgages to FHA for endorsement without prior review by FHA.

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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-05051