§1715z–21 Delegation of insuring authority to direct endorsement mortgagees

Summary

The Secretary can let one or more mortgage lenders approved under the direct endorsement program take over the Secretary’s job of insuring loans on homes meant mostly for 1- to 4-family occupancy. When picking lenders, the Secretary must look at their experience and how well they perform, compare their default rate to similar insured loans, and check any other factors that help lower the risk to the insurance funds. If the Secretary finds a loan was not made following the Secretary’s rules and then pays a claim within a reasonable time the Secretary sets, the lender may have to repay the loss. If fraud or false statements were involved, the lender can be required to repay no matter when the claim is paid. The Secretary may cancel a lender’s delegation for rule violations or other good cause by giving notice; the cancellation takes effect when the lender receives the notice or on a later date the Secretary sets, and that cancellation decision is final and cannot be reviewed by courts. Before approving any delegation, the Secretary must make rules and procedures, including rules about when lenders must repay losses.