Characteristics of HUD-Processed and Direct Endorsement Mortgages

摘要

The paper examines the characteristics of single-family Federal Housing Authority (FHA) mortgages processed under the Direct Endorsement (DE) Program. Under DE, approved FHA lenders underwrite loans directly, thus avoiding the lengthy delays often experienced with agency processing. Phase 1 of the analysis used information from FHA's automated data files to examine a relatively large sample of mortgages (31,000) in 18 metropolitan statistical areas. Phase 2 was based on more detailed information obtained from individual case binders. Findings indicate the DE program is meeting its basic underwriting objectives. DE mortgages have consistently had claim rates below those of HUD-processed mortgages. The relatively strong performance of DE mortgages to date cannot be attributed to pronounced differences in the types of borrowers served. Overall, the DE program is a viable alternative to direct processing by HUD; however, a cause for concern is that in many of the markets examined, DE mortgages had a lower concentration of minority borrowers than the mortgages processed by HUD both before and after the regulatory change.