An underwriter is a mortgage company employee who decides whether or not to approve or deny a mortgage loan application. The Federal Housing Authority (FHA) is a government agency that is part of the United States Department of Housing and Urban Development (HUD). To determine whether or not to provide the mortgage to the applicant, an FHA underwriter uses HUD’s underwriting guidelines for FHA-insured loans.
An FHA loan is obtained through a traditional mortgage lender, such as a bank, that specializes in FHA mortgage programs. FHA mortgages are government-backed or insured, which means that if the borrower defaults on the loan, the FHA will still pay the lender a percentage of the outstanding balance.
Although the FHA’s goal is to promote homeownership, it still has its own set of criteria and guidelines that applicants must follow in order to qualify for an FHA loan. Before the mortgage file is sent to the FHA underwriter for a decision, a loan officer works with the applicant to gather all of the information that must be included in it.
Collecting and verifying the mortgage application is part of putting the file together. The loan officer will also gather the applicant’s bank statements and paystubs, as well as order title work and an appraisal on the property. As each of these forms arrives, the loan officer double-checks them for accuracy before sending the file to the FHA underwriter.
The FHA underwriter goes over each piece of information in the file once it’s finished. The underwriter verifies that the applicant’s information complies with FHA and HUD guidelines in order for the applicant to be approved for the loan. Based on the information in the file, the FHA underwriter may deny or approve the application.
The FHA underwriter can also approve the file if certain conditions are met. For example, before a property is selected, the mortgage file may be sent to the underwriter for approval. The FHA underwriter has the option of approving the file if the appraisal and title work come back at the correct value and are clear. When the title work and appraisal are completed, the file is returned to the FHA underwriter, who must clear these contingencies before the file can proceed to closing.