Pre-Closing Test Cases

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Chapter 3
Miscellaneous Policies
Page 3-06

Once you have received approval from the "Lender Approval and Recertification Division" in Washington, DC, as a supervised or non-supervised lender, you may request permission to enter the Direct Endorsement (DE) pre-closing process. This is done by contacting the Processing and Underwriting Division of the Homeownership Center, in writing, in the jurisdiction of the lender's corporate office. (Each HOC requires submission of pre-closing files.) Your request to enter pre-closing should identify the DE underwriter, and include copies of your approval letter and the "Application for Approval FHA Lender and/or Ginnie Mae Mortgage-Backed Securities Issuer."

Upon receipt of the above-mentioned items, a "Welcome Letter" is mailed to the lender for review and notification to set-up an "entrance interview." After the interview is conducted, you may begin submitting cases for the pre-closing review. The reviews consist of not less than 15 cases. The cases are submitted for underwriting analysis, appraisal review, and issuance of a firm commitment. Upon receipt of 15 acceptable reviews as evidenced by issuance of a firm commitment the lender will be granted full and unconditional DE approval.

Five of the fifteen cases may be a combination of streamline refinances and automated underwritten/TOTAL cases.

In addition, if a lender is seeking Direct Endorsement unconditional release, separately or at the same time for approval to underwrite HECM loans, the submission of a minimum of 5 cases and the issuance of the firm commitments are required. Please properly and boldly identify cases as "PRE-CLOSING TEST CASES." We suggest that you place a cover sheet with the wording "PRE-CLOSING TEST CASE" on the outside of the binder. Due to the huge volume of cases passing through the mailroom, it is easy to misdirect cases that are not properly identified. Pre-closing test cases will be given a 3-business day turnaround time, commencing with the date received. If the case is completed sooner, you will be notified through the FHA Connection. Please do not call for status unless the 3-day period has passed.

In order to provide the highest level of service, files submitted as test cases on a post-closing basis will be reviewed on a lower priority basis than test cases waiting to close.