As a FHA training company, we often get the question, “How Do I Become a DE Underwriter?” Generically, the profession is part skill, part ability, part glutton for punishment and, most importantly, a recipient of excellent upfront and ongoing training.
We all know homeownership is a large part of the economy and a DE Underwriter plays a key role in that economic sector.
The key to it is proper product training, proper on the job training while working under the tutelage of a seasoned DE that allows the underwriter to effectively utilize the acquired skills and training in conjunction with critical decision making in order to make an informed underwriting decision.
Therein lies the professionalism: Utilizing the acquired skills and product knowledge to make a lending decision based on sound judgment.
A Direct Endorsement Underwriter (DE) underwrites FHA loans and has the authority to bind FHA to the loan approval process. DE’s work for the lender and as such, the DE will validate the loan documents as well as assure they meet the respective FHA product guidelines for which they are being submitted. This process will ensure timely endorsement of FHA insurance for the loan.
Lenders must certify that the candidate meets the DE qualifications of that specific lender and upon that certification, registers the candidate with HUD. Upon completion, the candidate will receive a CHUMS unique identifier number. (Computerized Home Underwriter Management System)
Handbook 4000.1 Section 1.B.3.b lays out the requirements for DE Underwriter Eligibility as follows:
- Have a minimum of three years full-time experience reviewing credit applications and one- to four-unit property appraisals, within the past five years; or,
- Have a minimum of two years full-time experience reviewing credit applications and one- to four-unit property appraisals, within the past three years, combined with an additional three years of such full-time experience within the past ten years; and
- Be a full-time employee of a single Mortgagee; and
- Be authorized to bind the Mortgagee in matters involving origination of mortgages.
Steps for nomination by the lender:
- Take a great FHA course as provided by Diehl and Associates. We have a unique twelve (8) hour class (DEUP) that covers all the basics of FHA processing and underwriting and will prepare the candidate for basic FHA underwriting with a HUD approved lender under the tutelage of a senior FHA underwriter.
- Get a certificate of completion for all courses (including Diehl’s advanced FHA class) that are taken in conjunction with all preliminary work done in this endeavor.
- Apply for and secure a DE underwriting position with a HUD approved lender.
- Each lender has its own requirements before nominating a candidate for DE status. There are no HUD requirements, per se, for the issuance of a CHUMS number. Again, the lender is responsible for the actions and decisions of the DE underwriter and therefore has its own “test requirements” for approval. Almost universally, the candidate will have to underwrite test cases (15-25) which are live files that will be reviewed by a senior DE underwriter upon underwriting completion by the candidate. Upon successful completion of all lender requirements, a CHUMS number will be requested by the lender. Some lenders also require an internal test of product knowledge and underwriting expertise.