FHA Connection – Clearinghouse for Government Mortgage Information

Mortgage Insider » Mortgage » FHA Connection – Clearinghouse for Government Mortgage Information

FHA Connection is the online information interface mortgage professionals use to obtain FHA case numbers, check approved vendors, assign or reassign appraisers, and track all important upfront mortgage insurance payments. It is the clearinghouse function of the FHA Connection system for mortgage denials I’ll discuss now.

More and more subprime borrowers are attempting to refinance away from rising mortgage payments into fixed rate FHA mortgages given their leniency on bruised credit. This has lead to an explosion in FHA mortgage originations. The Mortgage Bankers Association reports in the month of July, 2008, government loan applications the bulk of which are FHA, increased from 8.4% to 29.1% year over year.

However, there is a growing misconception about FHA programs and mortgage denials which real estate agents and mortgage professionals alike are bleeding into the marketplace…and it goes like this..

“An FHA mortgage denial is not really the end…just submit the loan to another lender. We’ll get a different and, hopefully, a more sympathetic underwriter.”

This is not true folks! FHA Connection logs mortgage denials and stores them (via borrower Social Security number and property address) for every future underwriter to see. Now the second underwriter knows about the first attempt and usually contacts the first underwriter to discuss the case. So, don’t believe any mortgage professional or real estate agent who thinks they can “game” the system.

This “underwriter shopping” to overturn mortgage denials some mortgage originators or real estate agents are attempting won’t work. The reality is the borrowers data must support mortgage approval and an earlier mortgage denial unless compelling new data is submitted is a dangerous game.

I’ve been working with underwriters for a long time and their goal is to approve loans, but not at the demise of the FHA system. Their first loyalty is to protect the system…as it should be. If defaults crash the FHA system, they are out of job and the country is out the program that put the most first-time buyers into home ownership than any other program.

That would be bad since it appears Fannie and Freddie are on their last leg.

Good Luck!