§1715z–21 Delegation of Insuring Authority to Direct Endorsement Mortgagees

Summary

The Secretary may let one or more approved mortgage lenders handle and insure loans on homes built mainly for 1 to 4 families. The Secretary must check a lender’s experience and track record, compare its default rate to similar markets, and consider other factors to reduce the risk to the insurance funds. If a loan was not made under the Secretary’s rules and the Secretary pays a claim within a reasonable time the Secretary sets, the lender must repay the loss. If fraud or lying was involved when the loan was made, the lender must repay the loss no matter when the claim is paid. The Secretary can cancel a lender’s authority for rule breaks or other good reasons by giving notice; the cancellation takes effect when the lender receives the notice or on a later date set by the Secretary, and that decision cannot be reviewed by a court. Before approving any delegations, the Secretary must create rules that explain the required procedures, including how repayment works.