HUD Boots Bad Mortgage Lenders from FHA Insurance Program
Published Date: 4/4/2025
Notice
Summary
HUD is ending the Direct Endorsement (DE) approval for some mortgage lenders who didn’t perform well with FHA-insured loans. This means those lenders can no longer underwrite and submit loans for FHA insurance. The changes affect specific lenders listed by HUD and take effect immediately, aiming to protect borrowers and the housing market.
Analyzed Economic Effects
5 provisions identified: 4 benefits, 1 costs, 0 mixed.
Specific lender barred from underwriting FHA loans
HUD has terminated Direct Endorsement (DE) approval for Residential Acceptance Corporation effective 2025-03-07 in the listed HUD field office jurisdiction. That mortgagee can no longer underwrite and submit single-family mortgages for FHA insurance in the HUD field office jurisdiction(s) identified in the notice.
Loans already approved still valid for FHA insurance
If your loan was closed or approved by the terminated DE mortgagee before the termination effective date, it may still be submitted for FHA insurance endorsement. Loans at earlier processing stages cannot be submitted by the terminated mortgagee but can be transferred to another mortgagee with DE approval in that area.
Clear numeric basis for DE termination
HUD may terminate a mortgagee's DE approval if that mortgagee's default and claim rate for loans endorsed within the preceding 24 months exceeds 200 percent of the default and claim rate in the geographic area served by the HUD field office and also exceeds the national default and claim rate.
Path to reinstate DE approval after six months
A terminated mortgagee may apply for reinstatement only after its DE approval has been terminated for at least six months. The mortgagee must submit an application via the Lender Electronic Assessment Portal (LEAP) that includes an independent CPA analysis of the terminated office's operations and mortgage production and a written corrective action plan showing implementation, and must meet the requirements of 24 CFR 202.5, 202.6, 202.7, 202.10 and 202.12.
Servicing and holding of FHA loans can continue
Mortgagees that are authorized only to hold or service FHA-insured mortgages may continue to hold or service those mortgages even after DE approval is terminated. Mortgagees must continue to pay existing insurance premiums and meet obligations associated with insured mortgages.
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Key Dates
Department and Agencies
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