FHA Extends Effective Date for Elimination of Some Correspondents and DE Approvals

The Department of Housing and Urban Development announced it’s extending certain effective dates for rules meant to strengthen lender approval criteria and make Federal Housing Administration approved lenders responsible for the oversight of mortgage brokers on Monday.

“After reviewing your comments regarding transitioning to compliance with the new changes, we are extending certain effective dates in order to give our lending partners more time to transition to their new business models,” said David Stevens, Commissioner of FHA.

Lenders who are in the process of obtaining their unconditional direct endorsement approval now have until July 1, 2011 to compete the process.

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“This extension will allow sufficient time for most non-DE mortgagees to obtain unconditional DE approval to become Principal mortgagees in Principal-Authorized Agent originations of Title II single family loans,” said Stevens.  “All other changes to Principal-Authorized Agent requirements in the Final Rule will take effect January 1, 2011, as previously announced in Mortgagee Letter 2010-20.”

HUD is also providing a temporary extension of FHA approved correspondents with loans in process that meet certain criteria.  In order for approved correspondents to close loans in their own name until March 31, 2011, the loan must be assigned a case number and approved by a DE underwriter as of December 31, 2010.

FHA approval of all correspondents for all other purposes will expire on December 31, 2010 and all other loans that do not meet the criteria and have not closed prior to January 1, 2011, must close in the name of an approved FHA Lender/Sponsoring Lender.

HUD has scheduled a conference call on Wednesday, December 22, 2010 at 2:00 p.m. EST to discuss the extensions.  The attendee call-in number is 800-675-2535.  Call in code is: 2662519.

For more information on the waivers, see here.