www.hudclips.org 


U. S. Department of Housing and Urban Development
Washington, D.C. 20410-8000

 
December 7, 1994
 
OFFICE OF THE ASSISTANT SECRETARY
FOR HOUSING-FEDERAL HOUSING COMMISSIONER
 
Mortgagee Letter 94-56
 
     TO:  All Mortgagees
 
        SUBJECT:        Loan Processing Requirements for HUD/FHA Approved
                        Loan Correspondent Mortgagees
 
                Effective immediately, HUD/FHA approved Loan Correspondent
        type mortgagees, will have the option of utilizing the services of
        an approved Sponsor for processing their FHA insured mortgage
        loans.  The Sponsor Mortgagee selected by the Loan Correspondent
        must be the same Sponsor that will complete the Direct Endorsement
        underwriting and purchase the loan after closing.  This option is
        available for all Loan Correspondents whether supervised or not.
 
                Under this option, the Loan Correspondent mortgagee must take
        the original application and conduct the face-to-face interview as
        required.  The loan must close in the name of the Loan
        Correspondent.  When requesting the FHA case number from the local
        HUD field office, the request must be made in the name of the Loan
        Correspondent, as is currently required.  The Department will now
        permit the Loan Correspondent's Sponsor to complete any or all of
        loan processing, including the following documentation, in the name
        of the Loan Correspondent:   Truth-in-Lending form, Good Faith
        Estimate, Verifications of Deposit and Employment, ordering of the
        credit report and appraisal and preparation of closing
        documentation.  Any discrepancies in the loan documentation, which
        require an explanation or resolution by contacting the home buyer,
        must be handled by the Loan Correspondent mortgagee.
 
                It is HUD/FHA's mission to promote homeownership while
        continuing to manage the level of risk to the FHA insurance fund
        and preserve the interests of FHA mortgagors.  In order to meet
        these goals, the Department believes it is imperative that HUD/FHA
        know with whom we are doing business.  The effect of this Mortgagee
        Letter is to provide greater flexibility in the processing of FHA
        insured mortgage loans, while continuing to meet these goals.
 
                Any questions regarding the provisions of this Letter may be
        referred to the Lender Approval and Recertification Division at
        (202) 708-3976.
 
Sincerely,
 

Nicolas P. Retsinas
Assistant Secretary for Housing-
Federal Housing Commissioner