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2. Overview of the DE Lender Approval Process


Contents:

Change Date

May 10, 2009


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2.B.2.aa. DE Lender Approval Process

The table below describes the stages of the DE lender approval process.

Stage Description

1

The mortgage lender, who has applied for unconditional DE Lender approval, submits a minimum of 15 mortgage loan application "test cases" for review by the Home Ownership Center (HOC).


Note: The 15 mortgage loan applications may vary in loan types. Since the loan applications are submitted prior to closing, the mortgage lender's underwriter cannot fully execute the Underwriter Certification.


Reference: For instructions on completing the Underwriter Certification during the pre-closing review phase, see HUD 4155.2 2.B.3.b.

2

The HOC performs a detailed review of each loan application.


Reference: For more information on the HOC loan application review requirements, see HUD 4155.2 2.B.3..

3

If the loan application submissions demonstrate


  • acceptable underwriting,
    • FHA issues a firm commitment to the mortgage lender to insure any of the eligible loan applications, and
    • the process continues with Stage 6, or
  • unacceptable underwriting, the process continues with Stage 4.

4

If the loan application submissions demonstrate unacceptable underwriting, the HOC


  • may request that more cases be submitted as part of the test period and,
  • may discontinue accepting test cases while the lender trains their underwriters on FHA requirements.

Reference: For more detail on how the HOC handles unacceptable underwriting, see HUD 4155.2 2.B.3.e.

5

Once the lender properly completes the required test cases, FHA grants unconditional approval.

6

After granting unconditional approval to a mortgage lender, the HOC performs a post-technical review (PETR) on the first 30 cases submitted by the lender to ensure continued acceptable underwriting.


Reference: For more information on PETRs performed by the HOC, see HUD 4155.2 9.B.1.

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