Written By: Bonnie Wilt-Hild, Op-Ed Writer
As FHA volume has increased (ours to about 90% of total originations), there seems to be more and more games being played with FHA Connection, particularly where wholesale originations are concerned. Don’t get me wrong, I love my brokers, I have a great relationship with most of them, but there are a few that have really learned to manipulate FHA’s system.
So I thought this a good time to discuss what I have been seeing in terms of how brokers are slipping around the system. With that said I would say that this week’s blog is most certainly geared for the lenders, so I will start by apologizing to all of the brokers out there.
One of the big things that I see, which I have been dealing with for quite some time, is case number assignment to the sponsor. It seems that some brokers out there will actually wait to get a case number until underwriting is complete to eliminate the lender/sponsor ability to reject the loan in FHA Connection. Think about it, if the case number has not been assigned in the system, you can not reject it in the system.
Taking it a step further, every now and again I will get a case submitted into the wholesale division which contains an FHA case number on both the application as well as the appraisal but there will be no FHA case number assignment. I used to underwrite the case and condition for the case number only to find out in the situations where the case was being rejected, that the case number was never assigned to my company under sponsorship in the first place. End result, my company does not have access to the case and can not reject the loan in FHA connection or perform any other functions for that matter.
After seeing quite a bit of that, I decided that we would not underwrite a loan until I had a case number assignment print out from FHA connection, listing my company as the sponsor. This was a disaster also. If I rejected the case and faxed the declination prior to rejecting the loan in FHA connection, the broker simply went into FHA connection right away and reassigned the case to another sponsor. Again, no access to the case.
This week has brought new information where playing with sponsor information in FHA Connection is concerned. It turns out that a few of our brokers are ordering a case number using a particular sponsor. Once the case number assignment is printed and placed in one copy package, they are going into FHA Connection and reassigning the sponsor and printing this case number assignment and putting it in a second copy package.
In some cases, brokers are doing this three or four times and submitting the loans to three or four investors at once, all of which think they are indicated as the sponsor where the case number is concerned in FHA Connection.
My suggestion is this. Make sure once you begin underwriting a case in which your company is acting as sponsor, go into FHA Connection and make sure that the case has not been updated to list another investor as the sponsor.
If it has, perhaps suspend the loan until you can validate that your company is listed as the sponsor in FHA Connection. If you are going to reject something, reject in FHA Connection before you fax or email the declination and if you have brokers that are really abusive with this kind of thing, you can always contact them and explain that if it continues to happen, you will worsen their pricing by .25 to cover all of the fall out (this by the way worked for us). As always, happy underwriting.
About The Author
Bonnie Wilt-Hild - As an op-ed writer, Bonnie holds 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".