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2. Overview of the Mortgage Loan Application and Insurance Endorsement Process


Contents:

Change Date

May 10, 2009


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1.A.2.aa. Loan Application and Endorsement Process Overview

The table below describes the stages of the mortgage loan application and endorsement process.

Stage Description

1

A borrower contacts a lender regarding a mortgage loan, and the lender determines if the loan would be eligible for FHA insurance.

2

The borrower, along with the lender's representative, completes the loan application. The loan officer collects all supporting documentation from the borrower and submits the application and documentation to the lender.


Reference: For more information on the standard application package and required documentation, see HUD 4155.2 3.C.

3

The lender applies for, and is assigned, an FHA case number through the FHA Connection.


Reference: For more information on the FHA Connection, see

4

The lender


  • assigns an appraiser through the FHA Connection to perform a property appraisal to determine the value of the property that is to be security for the mortgage loan, and
  • completes the appraisal logging in the FHA Connection.

Reference: For more information on appraisals and property standards, see HUD 4155.2 4.

5

The lender


  • instructs their underwriter to perform the mortgage credit analysis to determine the borrower's ability and willingness to repay the mortgage debt, and
  • enters the borrower income/credit information into FHA Connection.

Reference: For more information on performing a mortgage credit analysis, see HUD 4155.1 4.C.

6

The underwriter makes the underwriting decision. If the loan is


  • approved, the process continues with Stage 7, or
  • rejected
    • the borrower is notified, and
    • this completes the process.

Reference: For more information on borrower approval and rejection notification, see HUD 4155.2 5.2.

7

Once the loan is approved, the lender closes the loan with the borrower.


Reference: For more information on

8

After the loan is closed, the lender initiates the loan endorsement process.


Lenders not participating in Lender Insurance Program (LIP)


  • complete the Insurance Application function in FHA Connection
  • submit the case binder to the appropriate HOC for endorsement review
  • submit the case binder to the HOC in hard copy form.

Lenders participating in LIP


  • insure the loan through FHA Connection, and
  • submit the case binder in either electronic format (eCB) or in hard copy form.

Notes:

  • Participants in the LIP submit either a paper or electronic case binder (as appropriate) only when requested by the HOC.
  • The HOC may request the casebinder either because
    • a severe warning is displayed, or
    • a post-endorsement technical review (PETR) or appraisal review is required.

Reference: For more information on preparation and submission of the case binder, see HUD 4155.2 8.B.

9

Upon receipt of the case binder, the HOC


  • logs the closing package into the FHA Connection
  • performs a pre-endorsement review, and
  • issues either the
    • Mortgage Insurance Certificate (MIC), or
    • Non-Endorsement Notice/Notice of Rejection (NOR).

10

The HOC completes insurance endorsement processing using the logging and endorsement functions in the FHA Connection.


Result: Once the loan is endorsed, FHA Connection generates an MIC for the lender to download from the FHA Connection.


Reference: For more information on

11

To ensure that mortgage lenders understand and comply with FHA requirements, selected case binders are chosen for a post-endorsement technical review (PETR) by the HOC.


Reference: For more information on PETRs, see HUD 4155.2 9.C.

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