FHA Single Family Housing Policy Handbook 4000.1, II. ORIGINATION THROUGH POST-CLOSING/ENDORSEMENT > E. Title I Insured Programs > 4. Manufactured Home Loan Program — g. Post-closing and Endorsement

ii. Procedures for Endorsement

(A) Standard Immediately after closing and the Disbursement of loan funds, Lenders must submit each Loan to HUD for a post-closing, pre-endorsement approval. HUD will examine each Loan after closing and prior to endorsement to ensure that the necessary documents have been provided and system data fields are completed. The post-closing, pre-endorsement review is required for both DE Lenders and non- DE Lenders. Non-DE Lenders must submit Loans for the post-closing, pre-endorsement review in addition to the required pre-closing review. To initiate the insurance endorsement process, the Lender must complete the Title I Loan Insurance Application in FHAC and compile the case binder, with all of the necessary documents. The Loan must be current to be eligible for endorsement.

(B) Submitting the Loan for Endorsement Instructions for specific requirements for data format and delivery to FHAC are found in the FHA Connection Title I User Guide. The Lender must: • complete the Insurance Application screen in FHAC; • remit the UFIP to FHA in a lump sum within 10 Days after the date of loan settlement or the Disbursement Date, whichever is later; • submit evidence of assignment of the case for endorsement in the name of the originating Lender, if applicable; • submit evidence of case number transfer, if applicable, to another Lender prior to closing; and • submit case binder to HUD for post-closing endorsement review.

(C) Complete Insurance Application in FHAC Once the Loan is closed, the Lender must access FHAC to complete the Insurance Application screen and pay the UFIP. The Insurance Application screen requires the Lender to enter additional data about the Loan. The system will either confirm that the data entered was accepted, or will provide information regarding corrections the Lender must make to successfully complete this step. Data fields that must be completed are grouped by the following subject areas: • general loan information • Lender information • credit/underwriting information • Borrower information • address information

(D) Upfront Insurance Premium Remittance Lenders must remit the upfront insurance premium electronically through Pay.gov. Instructions for accessing Pay.gov can be found in the Title I User Guide, which can be accessed from FHAC under Property Improvement/Manufactured Home. HUD requires the UFIP to be paid within 10 Days of the Loan Disbursement.

(E) Late UFIP Payments HUD views the owner of the Loan legally responsible for the payment of all valid premium charges. If the Lender uses a servicing agent to handle this function, HUD can establish billing for the agent, but the Lender remains the owner of the lender portfolio. The Lender is assessed a penalty charge of 4 percent of the amount of any premium payment not received by HUD by the due date. Premium payments received from a Lender more than 30 Days after the due date are also assessed daily interest at the Treasury Current Value of Funds Rate. However, a Lender is not required to pay a penalty charge or daily interest if HUD fails to issue a billing statement for annual premium charges in a timely manner. (1) 10-30 Days Late A one-time late charge of 4 percent is assessed on a UFIP payment received more than 10 Days after the Disbursement Date. The Lender must pay the late fee before FHA will endorse the Loan for insurance. (2) More than 30 Days Late If the UFIP is paid more than 30 Days after the Disbursement Date, the Lender will be assessed the late fee plus interest. The interest rate is the Treasury Current Value of Funds Rate in effect when the UFIP payment is received. The Lender must pay both charges before FHA will endorse the Loan for insurance.

(F) Printout of Case Number Assignment Screen The Lender must include a printed copy of the case number assignment screen showing originating Lender if applicable.

(G) Submitting Loans for Post-closing/Endorsement Review Lenders must submit loan documents to the attention of MH Post-closing Endorsement Review at the FOC. During the post-closing endorsement review, HUD determines if the Loan meets all program requirements. HUD will review the documentation to ascertain if there is any indication that any certification or required document is false, misleading, or constitutes fraud or misrepresentation.

(H) Timely Endorsement The Lender must report each Loan for insurance in FHAC within 30 Days from the date of the Loan’s Disbursement or purchase from a Dealer or another Lender. Any Loan refinanced under this part must similarly be reported on the prescribed form within 30 Days from the date of refinancing.

(I) Initial Request for Endorsement The insurance application request is considered complete once HUD has received the case binder, the UFIP has been paid, and the insurance application in FHAC has been completed and has passed all system validations. The date a case binder is received is based on the date the FOC receives the required lender documentation. The Lender is responsible for having the case binder delivered to the FOC within the allotted time period. Lenders may confirm the date that the lender documentation was received by accessing the Case Status screen in FHAC.

(J) Late Request for Endorsement A late endorsement certification must be submitted to HUD with the insurance package for review and consideration if the Loan is not submitted for endorsement within the required 30 Day period after closing.

(K) Late Endorsement Certification Lenders must certify, via FHAC, that all Loans reported for insurance after 30 Days from the Disbursement are not currently in Default. A certification window automatically appears when a Loan is reported past the deadline and must be checked in order to continue the insurance submission process. At the time of the certification the Lender is confirming that: • no Loan Payment was currently past due more than 30 Days; and • the Lender or its agents did not provide the funds to bring and/or keep the Lender current or to bring about the appearance of an acceptable payment history.

(L) HUD Determination of Endorsement HUD will review the Lender’s certification and make a determination to accept or reject the request. HUD will endorse the Loan provided the final review indicates that the degree of risk to HUD has not increased since the time of closing. A Loan that is in Default when submitted for endorsement will not be insured, except in those instances where it can be demonstrated that HUD was responsible for a delayed request for endorsement.

(M) Loan Insurance Certificate Once determined as acceptable, HUD will endorse the Loan via FHAC and issue a Loan Insurance Certificate (LIC). The LIC will be made available to the Lender through FHAC. The LIC must be printed and retained by the Lender in the case binder. A Loan is not insured until HUD issues an LIC for the Loan. The LIC is an electronic document generated by HUD via FHAC and is documentary evidence of the insurance.

(O) Ineligible for Insurance (1) Non-Endorsement Notice/Notice of Return If HUD determines the Loan to be ineligible for endorsement, the FOC will generate a Non-Endorsement Notice/Notice of Return (NOR). The NOR will include the reason(s) for non-endorsement and detail any corrective action that must be taken by the Lender. Corrective action may include providing the FOC with additional or revised documentation for the case binder or providing additional or revised data on the Insurance Application screen. After taking corrective action, the Lender can access the Insurance Application screen and resubmit the insurance request for review. If HUD issues an NOR and the Lender chooses not to resubmit the case for review, the Lender must report this to HUD via FHAC. The Lender must also obtain a refund of the UFIP paid to HUD and apply the refund to the principal balance of the Lender. (2) Final Rejection of Endorsement If HUD determines that the case is ineligible for endorsement based on a defect that cannot be corrected, the NOR will indicate that it is a permanent rejection. In such case, the NOR will instruct the Lender to notify the Borrower that the Loan will not be insured by HUD/FHA and to inform the Borrower regarding the circumstances that make the Loan ineligible for FHA insurance. The Lender must also obtain a refund of the UFIP paid to HUD and apply the refund to the principal balance of the Loan. (3) Denied or Canceled Loans Lenders must report to HUD, through FHAC, the denial or cancellation of all Loans for which a Title I case number has been issued.

iii. Post-Endorsement Technical Reviews HUD will perform Post-Endorsement Technical Reviews (PETR) on a sample of insured Loans from the Lender. This review includes a detailed analysis of the origination, credit underwriting and post-closing documentation provided by the Lender with the request for endorsement submission. HUD may request servicing documents or other additional documentation from the Lender to complete this review. HUD will provide the Lender with a rating for each Loan reviewed and, if applicable, specific feedback pertaining to the rating. The ratings are described below.

(A) Conforming A Loan receives a rating of conforming when the lender review finds no documentation errors, omissions or violations of Title I regulations. This rating is also dependent on HUD’s determination that the Lender’s decision to approve the Loan was sound and the level of risk was acceptable.

(B) Deficient A Loan receives a rating of deficient when the lender review identifies documentation errors or omissions that HUD expects can be corrected by the Lender in future submissions for insurance endorsement. This rating is also dependent on HUD’s determination that the Lender’s decision to approve the Loan was sound and the level of risk was acceptable. Lenders who consistently submit deficient files may be subject to increased PETR sampling and may risk the loss of their Title I Direct Endorsement privileges.

(C) Unacceptable A Loan receives a rating of unacceptable when serious violations of FHA requirements were found or if documentation was missing that would be necessary to determine if underwriting guidelines were followed. HUD will issue a letter to the Lender identifying the reason for the unacceptable rating. The Lender is required to respond within 30 Days from the date of the letter, with a satisfactory explanation as to why the Loan was approved. Failure to respond, or the receipt of an unsatisfactory response, may result in HUD requesting the Lender to indemnify HUD against any loss associated with the Loan. Demands for indemnification may be made by the Director of the Quality Assurance Division (QAD), by the Office of Lender Activities and Program Compliance or by the Mortgagee Review Board (MRB). If indemnified, the Loan will be flagged within the Title I insurance system to prevent claim payment to the offending Lender. Serious Findings may also result in the loss of Title I Direct Endorsement privileges.

(D) Mitigated Loans that were initially rated as unacceptable may subsequently be given a rating of mitigated. To receive a mitigated rating, the Lender must provide documentation in response to the initial unacceptable rating and HUD must determine that this documentation mitigates all risks to HUD.