How to Process FHA Loans
FHA (Federal Housing Administration) loans are mortgages insured by the Federal Government. The government does not directly lend to borrowers, but rather outsources mortgage applications to qualified lenders. These lenders must follow strict guidelines when processing FHA loans. Learning to process these loans is essential for any loan originator interested in financing FHA loans.
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Instructions
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Obtain the application FHA Case Number. This is a distinct number assigned to all prospective FHA mortgage applications. It will pull up all of the borrower's personal, employment, asset and property information. Comb the application for inaccuracies and typos and contact the borrower to provide any missing information. Enter your Lender FHA Number (the number assigned to you by the FHA as a qualified lender). Pull the merged credit report.
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Ensure the borrower is eligible for a FHA-sponsored mortgage. Eligibility requirements are broad, but in general, the mortgagor must: be applying for a 15, 20,or 30 year mortgage; be applying for a conventional or ARM-approved FHA loan; be applying with a property that is a single family, multi-unit primary residence or condominium. Refer to resources if you are unsure the borrower meets FHA requirements.
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Send the application for assessment. This requires you to fill in the mortgagor's information into the Loan Prospector software program. Again, if there are fields which require information you do not have, you must contact the borrower. Be sure to check the box for "Automated Underwriting."
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Review the mortgage scorecard information. This is the field that will populate after you submit the application for pre-approval. This includes: the Full Feedback Certificate, the Documentation Checklist and the Merged Credit Report. The Full Feedback Certificate contains the verified mortgage application. The Documentation Checklist tells you what documents are required from the borrower for full approval. The Merged Credit Report contains the borrowing history of the mortgagor.
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Obtain required documents from the customer if the Full Feedback Certificate confirms the borrower's eligibility. If the application is not automatically pre-approved, send it to underwriting. When you receive all documents, send the application to final approval review. The underwriter will inform you if any information is missing at final approval. All contact between the underwriter and you must be conducted through the Loan Prospector system.
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