U.S.DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
                       WASHINGTON,D.C. 20410-8000
 
                       January 19, 1990
 
OFFICE OF THE ASSISTANT SECRETARY FOR
HOUSING-FEDERAL HOUSING COMMISSIONER
 
                                       Direct Endorsement Letter 90-1
 
TO:  ALL APPROVED DIRECT ENDORSEMENT MORTGAGEES
 
SUBJECT:  Direct Endorsement Update - Sending Copies of Rejected
            Loan Applications to HUD
 
     To further improve our internal control procedures, HUD will
now require that all Direct Endorsement (DE) approved lenders
submit to the local HUD Field Office a copy of the Form HUD 92900,
Application for Commitment for Insurance and Form HUD 9290OWS,
Mortgage Credit Analysis Worksheet for all FHA applications
rejected by DE underwriters.  This requirement to send to the
local office a copy of the Forms HUD 92900 and 9290OWS for all
rejected applicants is effective for all applications underwritten
(worksheet signed by the DE underwriter) on or after March 18,
1990.  (Please note that lenders may send either photocopies of
the forms or send one of the tear-out copies.)
 
     The local HUD Field Office will be entering certain data into
our Computerized Home Underwriting Management System (CHUMS) from
the HUD 92900 and HUD 9290OWS.  CHUMS will now track these rejects
so that if the applicant requests a transfer of the case to
another lender or submits a new application to another lender, HUD
will be able to track the applicant and know that the applicant
was previously rejected for mortgage insurance by a DE lender.
This will improve our internal quality controls.
 
     If you have any questions concerning this letter please
contact the Headquarters Single Family Development Division at
(202) 755-6700.
 
                              Very sincerely yours,
 
                              C. Austin Fitts
                              Assistant Secretary for
                                Housing-Federal Housing Commissioner