Who are direct endorsers?

• A. Appraisers approved by FHA
• B. Lenders authorized to underwrite their own FHA loan applications
• C. Mortgage brokers who handle FHA loans
• D. Underwriters employed by HUD who evaluate borrowers

Answer: (B)

Direct endorsement is when a lender is given the authority by FHA to underwrite and endorse mortgage loans for FHA insurance on its own, without requiring a separate FHA review first. This delegated underwriting status is granted to the lending institution, allowing its own underwriters to approve loans that meet FHA guidelines and then submit them for insurance. That’s why the best description is “lenders authorized to underwrite their own FHA loan applications.”

Appraisers approved by FHA are the people who determine property value, not who approves the loan. Mortgage brokers facilitate loan deals but don’t underwrite loans themselves. Underwriters employed by HUD are federal staff who evaluate loans in a traditional, non-delegated process.