Written By: Bonnie Wilt-Hild
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Over the past several months, I have had several individuals ask me what it takes to become a Direct Endorsement or DE Underwriter for HUD. Many of the individuals who were asking for information were either conventional or sub-prime underwriters that were currently unemployed or just realized that they needed to make the transition from conventional to government underwriting due to current market demand.
I will say that presently, DE underwriters seem to be few and far between. Most of them went the way of Alt A and sub-prime seven or so years ago when the market turned more towards non-traditional financing. Even those who have had their DE for years are having a hard time making the transition due to large number of changes in the FHA program overall. In the past 3 years alone, FHA has adopted completely different appraisal protocol, they have all but done away with Non-allowable closing costs and as we are all aware, are even doing away with the use of the Mortgage Credit Analysis Worksheet.
Additionally, it seems that every mortgage broker and lender nationwide have also made the jump to government lending because of the limited financing options available in today’s market and as a result, individuals with FHA experience are in high demand and there seems to be quite a shortage of experienced personnel.
A lot of individuals who are Direct Endorsement underwriters have taken some training classes and have had their DE reinstated by HUD, however there are a lot of really good underwriters in the industry that need to make the transition to DE underwriter in order to be marketable. From what I have gathered from peers in the industry, not to mention some of my own students who are actively seeking employment, brokers and lenders are actually requesting potential employees to take tests where the FHA stuff is concerned or if they are aware that the employee has taken FHA training courses are asking for the Certificate of Completion. I actually had one former student ask me if I could provide a class outline for the DE Underwriting course that I teach because a potential employer wanted to review the content of the course before accepting the certificate of completion. This seems to be the norm for underwriters who wish to become DE underwriters.
So how exactly does an individual become a DE underwriter seems to be a pretty common question these days. There really is limited information on the subject, this has to do with the fact that FHA no longer approves individual underwriters, they haven’t since 1996. As discussed in Mortgagee Letter 96-10 the underwriter approval process was replaced with Underwriter Registration using the Underwriting registry. Per the mortgagee letter:
“UNDERWRITER APPROVAL PROCESS REPLACED WITH REGISTRATION. Effective February 26, 1996, FHA will no longer approve individual underwriters to participate in the Direct Endorsement (DE) program. The approval process previously employed has been replaced by a DE Underwriter Registry. All DE underwriters must be registered with FHA. Failure to do so may delay issuance of mortgage insurance certificates on loans underwritten by non-registered underwriters. Underwriters with valid CHUMS identification numbers and currently shown as working for an FHA-
approved lender need not re-register. We will continue to check all underwriters against the Credit Alert Interactive Voice Response System (CAIVRS) file and we reserve the right to remove underwriters from the registry upon imposition of sanctions taken by local FHA offices or Headquarters.
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Lenders must update underwriter information whenever a DE underwriter is hired or when an underwriter has achieved the necessary qualifications to underwrite FHA-insured mortgages for the company. Lenders may add, update, or delete underwriter
information in the registry through CLAS (CHUMS Lender Access System). CLAS has been expanded to maintain the necessary information under the heading the heading
"Underwriter Registry," which is a new option on the CLAS Add/Update Request menu (CLAS Version 8.0 is required). After the information has been processed by CHUMS, CLAS will return an Underwriter Update report to the lender verifying the information
provided as well as the underwriter's CHUMS identification number. Lenders may also obtain a listing of all its underwriters on the registry through CLAS through a written request.
III. COMMUNICATIONS AND LENDER TRAINING. Since we will no longer review underwriter qualifications and will rely on lenders to assure that its underwriters are fully qualified, it becomes even more important to provide adequate training to underwriters as well as production personnel. As our policies and procedures evolve over time, it is imperative that we communicate with the lending community and keep it informed of those changes designed to expand homeownership opportunities.”
What all of this means for the individual that wants to become a DE Underwriter is that there is no company on the planet that can sell you a DE or guarantee that you will be a DE once you have completed their training course. The only way to become a DE underwriter is through lender nomination. In other words, your current employer or future employer must determine that you have the knowledge and experience to underwrite mortgages to guidelines and principals as set forth by the U.S Department of Housing and Urban Development where the FHA mortgage insurance program is concerned.
I want to say first that there is definitely a difference between conventional underwriters and government underwriters and it’s not the Chums ID number. Program guidelines are different no doubt but the overall mentality is different. Forget FHA Connection, case number assignments and LDP and GSA lists, the overall underwriting mentality embraces more of what I would call old school underwriting than the underwrite by software mentality. Manual underwrites live on in the world of FHA.
If one was interested in becoming a DE underwriter, I would first suggest training. Remember, ultimately you are going to need to impress your current or future employer with your knowledge of the program to the extent that they feel comfortable nominating as a DE.
There are several training options available to those individuals who would like to pursue further training. Fhatraining.org is a great website for information on FHA/VA underwriting training classes. Additionally, this course will also provide a FHA DE Underwriting certification stating that the training was completed and will provide sufficient information so that any FHA DE underwriting candidate will be able to complete all of the underwriting responsibilities associated with being a DE Underwriter.
Once the underwriter has sufficient knowledge then it will be up to their current employer to nominate them as a DE underwriter. It is at this point that the individual will then have their DE which will remain with them for as long as they wish to continue to remain in the mortgage industry.
Remember, there are still a lot of great opportunities out there in the mortgage industry for processors and underwriters; However, the best ones are going to the people with FHA experience or at least a sufficient amount of verifiable training. If you have been unable to locate anything once you have completed some training, try http://www.FHAajobs.com and see if you can find anything there. As always, happy underwriting.
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About The Author
Bonnie Wilt-Hild - As an NAMP® staff writer, Bonnie currently serves as a senior instructor for FHA Online University (www.FHA-Classes.org) as well maintains a full-time mortgage underwriting position as the Senior FHA DE Underwriter for a major lending institution. With over 25+ years of senior-level FHA/VA Government underwriting experience, Bonnie is considered the "Queen of FHA Loans". If you're interested in becoming a writer for NAMP®, please email us at: email@example.com.