What are direct fha lenders?
The term " FHA direct lender" is a lender autorized to approve loans for FHA Insurance without prior submission to FHA (HUD). The correct term is "FHA Direct Endorsement Lender".
For a lender to be eligable for the direct endorsement program, they must comply with fairly strict guidelines set forth by HUD. These guidelines include HUD's review of the company's experience, sound lending practices, financial strength, and overall business conduct.
The purpose of the program is to save time in the mortgage process. The big misunderstanding in the public is that FHA is a lender. FHA is not the lender, they simply insure the lender to minimize losses in the event of a default. They issue guidelines for what can be approved under FHA insurance. These guidelines dictate what is acceptable for a lender to expect FHA to insure.