HUD/FHA processes Post-Endorsement Technical Reviews (PETRs) on a certain percentage of loans that they insure.
In this regard, whenever serious underwriting and/or appraisal deficiencies are observed and a case is rated “Unacceptable,” a Findings (or Deficiency) Letter is generated outlining the defects and requesting that the lender respond to each of the deficiencies within an established period of time.
If the lender fails to respond to the letter or submits an inadequate response, HUD’s Processing & Underwriting Division staff will forward the case to HUD’s Quality Assurance Division (QAD) for pursuit of an Indemnification Agreement with the lender.
As a result, the timely receipt and response to the initial Findings Letter is essential. Many times, however, lenders have complained that they did not receive HUD’s Findings Letter or that it was sent to the wrong address. In addition, it is very time consuming for HUD staff to manually generate Findings Letters, prepare envelopes, route mail, and track this correspondence.
Since approx. 50% of the PETRs that are processed are initially rated as “Unacceptable” – there is a large volume of Findings Letters that are generated each day at the four HUD Homeownership Centers (HOCs).
Well, I can now cross off one of my “Bucket List” items since FHA has announced that they are scheduled to send out eFindings Letters on April 27, 2015. As Director of the Philadelphia HOC’s Processing & Underwriting Division for an 11 year period (2000 thru June 2011), a major portion of my day was spent reviewing and signing off on Findings Letters and making sure that this correspondence was promptly routed to HUD’s mail room.
In addition, I would regularly respond to complaints from lenders who had been contacted by HUD’s Quality Assurance Division seeking an Indemnification Agreement on a case in which they claimed they did not receive a Findings Letter. I always said that there had to be a better way to transmit and track such correspondence. Now that time has come!
HOWEVER – with this new process comes greater accountability for mortgage lenders. The first thing that a lender should do is check the accuracy of the Email address that they want eFindings Letters sent to by going into FHA Connection and reviewing their “Administrative Address”.
Also, once this correspondence is received at this Email address, each lender should establish their own internal protocols as to how they want their eFindings Letters disseminated throughout their organization.
With the electronic transmission of these Letters, both HUD, and all mortgage lenders will be able to better track current and past eFindings Letters. Lenders will be able to obtain status reports on each of the Letters that had been sent to them thereby streamlining and expediting their communications with HUD staff. This is great news for lenders that originate FHA loan transactions!