To FHA Approved Lenders: are you hiring or terminating staff Underwriters?
To DE Underwriters: are you thinking about changing jobs?
What you both need to know!
In my prior Blog Post, I discussed the current process by which prospective “Direct Endorsement” (DE) Underwriters obtain their FHA approval & DE number.
Once someone has obtained this designation, it is important for lenders and underwriters to be aware of the registration requirements when changing employers. Failure to follow these established procedures could lead to numerous problems for both the lenders and the employees involved.
Every FHA approved lender has at least two designated “FHA Connection Application Coordinators”. These individuals are authorized and empowered to register their DE underwriting staff in the Underwriter Registry screen in FHA Connection when they (underwriters) are hired by their Firm as well as when any underwriter resigns their position or are terminated.
Failure to properly register a DE underwriter could result in a situation in which FHA loans transactions that the underwriter processes may not be able to obtain FHA mortgage insurance. Because their DE number will not be recognized by HUD’s computerized system as an active DE number for that Firm at the time the loan was approved.
Conversely, if a DE underwriter resigns their position and accepts another job with an FHA approved lender – their new employer will not be able to register their DE number for their Firm until such time as their previous employer enters a “termination date” in the Underwriter Registry screen in FHA Connection.
As a result, the DE underwriter would not be able to underwrite any FHA loan transactions in their new job until their previous employer enters a termination date and their new employer enters a date hired in the Underwriter Registry. HUD’s computerized system was programmed accordingly since it is HUD’s policy that underwriters can only be approved by one Firm at any given time.
[poll id=”40″]
On a related topic, I was recently asked by a lender if they could rescind the DE number of one of their underwriters since it had come to their attention that this underwriter was planning on resigning.
HUD has previously delegated the responsibility of registering qualified staff (and obtaining their DE number) to approved lenders, once an underwriter has obtained their “DE number”. However, only HUD can suspend or terminate their FHA approval status – for good cause.
In fact, the DE number that is assigned to an underwriter remains with them their entire career, no matter how many times they may change jobs.
Perhaps HUD may want to consider imposing a testing component as part of the DE underwriter registration process? Tests could be administered on-line using the FHA Connection Application Coordinator’s access & would be under their supervision.
Evidence of a passing score would need to be obtained in addition to a clear CAIVRS check before a DE number would be assigned to the applicant. At least HUD would have some assurance that the prospective underwriter has some basic understanding of FHA underwriting policy & procedures before they obtain their DE number. Under the current process – HUD must depend totally on the judgment of the lender.
Not an ideal situation!