FHA Single Family Housing Policy Handbook 4000.1, I. > DOING BUSINESS WITH FHA > A. FHA Lenders and Mortgagees (09/20/2021) > 5. Supplemental Mortgagee Authorities — a. Title II Direct Endorsement Authority

(A) First-Time Applicants (1) Application

(a) Request to Enter into the Test Case Phase The Mortgagee must submit a written application for Unconditional Direct Endorsement authority to FHA by emailing the required documentation to the FHA Resource Center at [email protected].

(b) Required Documentation The Mortgagee’s Direct Endorsement application must contain a letter signed by a Corporate Officer requesting entry into the Test Case Phase that contains the Mortgagee’s home office 10-digit FHA Lender ID and all underwriters’ names and the four-character FHA-assigned identification numbers issued to these underwriters. (2) Notification and Entrance Conference If the Mortgagee meets the requirements for conditional authority and submits the required documentation, the Mortgagee will receive a Test Case Phase approval letter from the HOC. The HOC will also provide reference materials and a list of the specific requirements that must be met for the Mortgagee to obtain Unconditional Direct Endorsement authority. The Mortgagee must participate in an in-person or telephone entrance conference with the HOC before it will be eligible to submit Test Cases. (3) Test Case Phase The Mortgagee must submit Test Cases to FHA for review during the Test Case Phase. FHA will review these cases for compliance with FHA’s origination, underwriting, and closing requirements. (a) Case Binder Submission Mortgagees who receive a Direct Endorsement Program Test Case approval letter from FHA must submit all Test Case binders for review post-closing. The Mortgagee must submit all Test Case files using the FHA Catalyst: Case Binder Module. The Mortgagee must ensure that: • all required certifications are executed; and • a complete case file post-closing is submitted that includes all required origination, underwriting, and closing documents as specified in the uniform case binder stacking order. The HOC will perform a review for compliance with FHA underwriting and closing guidelines. Review results will be documented in accordance with Findings for the Title II Loan Reviews, and Mortgagees must respond to requests using the functions provided in the Loan Review System (LRS). The HOC will issue either a Firm Commitment (approval) or Firm Reject (denial) via a Notice of Return (NOR). Once a Firm Commitment is issued, the HOC will process the case for endorsement. If a NOR is issued, the Mortgagee must make all necessary corrections and provide all required documentation to the HOC using the LRS before the Mortgage can be endorsed. (b) Test Case Underwriting Report Mortgagees who receive a Direct Endorsement Program Test Case approval letter from FHA must review all Test Case results in the LRS.

(c) Test Case Closing Documents The Mortgagee must ensure that all required certifications are executed and included with each complete case binder that is submitted to the HOC for endorsement processing. (4) Approval Decision (a) Approval of Unconditional Direct Endorsement Authority After the Mortgagee successfully completes the required Test Cases, FHA will grant the Mortgagee approval for Unconditional Direct Endorsement authority. The Mortgagee must receive a minimum of 15 Firm Commitments for forward mortgage authority or five Firm Commitments for HECM mortgage authority within a period of 12 consecutive months following the date of the Direct Endorsement Program Test Case approval letter in order to be granted Unconditional Direct Endorsement authority. The Mortgagee will receive an approval letter and may then begin submitting Mortgages to FHA for endorsement without prior review by FHA. (b) Denial of Unconditional Direct Endorsement Authority The Mortgagee will be denied approval for Unconditional Direct Endorsement authority if, at any time during the Test Case Phase, FHA determines that the Mortgagee’s submissions demonstrate a lack of knowledge of FHA requirements, or if FHA identifies unacceptable practices. (i) Denial Decision FHA will provide the Mortgagee with written notice of a denial of Unconditional Direct Endorsement authority that specifies the reason for the denial. (ii) Denial Appeal The Mortgagee may appeal this denial by requesting an informal conference. The Mortgagee must submit its appeal in writing to the HOC that processed the Test Cases. The HOC must receive the appeal within 30 Days of the date of the notice of denial. (iii) Informal Conference FHA will conduct an informal conference with the Mortgagee and its counsel, if any, no later than 60 Days from the date of the denial. (iv) Determination FHA will issue a determination in writing following the informal conference stating whether Unconditional Direct Endorsement authority is approved or denied. (v) Appeal Following Informal Conference The Mortgagee may appeal a denial following the informal conference by submitting a written request to the Deputy Assistant Secretary (DAS) for Single Family Housing, or their designee, within 30 Days of the date of the denial determination. The Mortgagee is not entitled to any meeting or informal conference with the DAS or the designee. The Mortgagee will be notified in writing of the decision of the DAS or the designee. The decision of the DAS or the designee constitutes final agency action. (c) Reapplication Following Denial Any Mortgagee who is denied Unconditional Direct Endorsement authority will not be permitted to re-apply until it has: • demonstrated appropriate remedial education or action; • supplied evidence to support such action; and • waited a minimum of 180 Days from the date of final agency action.