My HUD Approval Experience - 2008
I just completed the process of obtaining my non-supervised mortgage approval for FHA loans. This approval allows my firm to underwrite, close and service FHA loans. Unfortunately HUD is currently SWAMPED, every lender and their brother wants to be FHA approved. There is this sentiment that FHA is the New Sub-prime, unfortunately if this is true than FHA will fall to the same fate that sub-prime did. I am very passionate about FHA NOT being Sub-prime and what I think is current happening in FHA Lending because of this misconception. If you would like to read my ramblings on FHA Sub-prime be my guest.
So back to the FHA Approval Process. I set out to go it on my own, without hiring a consultant. I had been quoted prices from $1,200 to $5,000 and decided I was going to go it on my own. At the last minuted I chickened out and hired a consultant. I am glad I did, it definitely took the edge off to have a professional on my side AND I found out (too late) that I had wasted about $2,000 that the consultant would have saved me! The consultant I used only ended up costing me about $1,200 and was worth every penny of it.
Lets start with looking at the money I wasted:
1) My First and Biggest Waste of Money - getting a Dunn and Bradstreet Report. I am sure DNB has its purposes and is a great service but if your sole reason to get it is for the HUD business credit report requirement there are MUCH CHEAPER ways to get it. My consultant had a relationship with a credit reporting company to provide a business credit report for around $100. I spend OVER $1000 with Dunn and Bradstreet to get the report. I paid around $800 to get a 1 day rush addition into the DNB system, then I had to pay another $300 to get the report I could provide to HUD. The “Free” report they gave me with the $800 service said in bold letters “NOT TO BE DISTRIBUTED” and you know if anyone is going to pay attention to that its the Federal Government!
2) Buying a Quality Control Plan - I paid $1,200 for a compliance manual that included a quality control plan. My consultant ended up preparing one for free that we submitted with my application and then once I was approved I ended up going with a third part QC Provider that has yet another Quality Control Plan (that was free with their service). I know have THREE Quality Control Plans and the only one I wont ever use is the one I paid $1,200 for!
Total Wasted: $2,300 in an attempt to save $1,200!
Once I finished wasting all that money we were ready to submit my application! My application was submitted on 1/11/08 and I was approved on 2/22/2008. There was absolutely no contact from HUD until a few fays before we were approved. We were missing one resume, they called the consultant, he provided it, and the NEXT DAY we were FHA approved.
Now in addition to not wasting money and hiring a consultant, I do have some tips for you to save time so here we go:
FHA Approval Tip #1 - Getting a non-supervised mortgagee approval without a warehouse line. Most consultant and people “in the know” will tell you that you cannot get a non-supervised mortgagee approval without a warehouse lines. In fact if you read the FHA Quick Reference for lender approval you would think the same. Fortunately, being the geek that I am, I actually read the entire approval handbook and it clearly states instead of a warehouse line you can have a letter from a financial institution stating they will fund your FHA loans. So call your favorite AE and get a letter that says the bank will TABLE FUND your FHA Loans and you have a jump on FHA Approval before you get warehouse approval! I was a direct endorsement lender before I had warehouse lines!
FHA Approval Tip #2 - Find Out You Are Approved A Week Early! The day after HUD enters your approval, you will be listed on the FHA website as an approved lender. I found out a full 5 days before I received my official approval letter from FHA. You can access the approval website here: .
FHA Approval Tip #2 - Apply for FHA Connection ASAP! - HUD’s online system sits at the heart of all lender activities. Without FHA connection you can’t do anything. So here is the trick, all you need to apply for your FHA coordinator ID is your HUD ID#. Within a day or two of your approval HUD will enter you into the Neighborhood watch system, which has public access and lists the HUD ID# of all lenders and branches. You can access Neighborhood watch and then click on lender details, enter your name, and there’s your ID.
It is important to apply for your FHA Connection Application Coordinator ID AS SOON AS POSSIBLE because it comes in the MAIL. Not e-mail, good old fashioned, took me 10 days to get it, USPS Mail. It will take TEN DAYS to get your access to FHA Connection so order it early. Once you have your HUD ID, go here to apply for you application coordinator ID.
Good Luck and Good Lending!