[Federal Register Volume 76, Number 76 (Wednesday, April 20, 2011)]
[Notices]
[Pages 22120-22122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-9504]
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR- 5511-N-01]
Credit Watch Termination Initiative; Termination of Origination
Approval Agreements
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This notice advises of the cause and effect of termination of
Origination Approval Agreements taken by HUD's Federal Housing
Administration (FHA) against HUD-approved mortgagees through the FHA
Credit Watch Termination Initiative. This notice includes a list of
mortgagees which have had their Origination Approval Agreements
terminated.
[[Page 22121]]
FOR FURTHER INFORMATION CONTACT: The Quality Assurance Division, Office
of Housing, Department of Housing and Urban Development, 451 Seventh
Street, SW., Room B133-P3214, Washington, DC 20410-8000; telephone
(202) 708-2830 (this is not a toll-free number). Persons with hearing
or speech impairments may access that number through TTY by calling the
Federal Information Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION: HUD has the authority to address
deficiencies in the performance of lenders' loans as provided in HUD's
mortgagee approval regulations at 24 CFR Sec. 202.3. On May 17, 1999
HUD published a notice (64 FR 26769), on its procedures for terminating
Origination Approval Agreements with FHA lenders and placement of FHA
lenders on Credit Watch status (an evaluation period). In the May 17,
1999 notice, HUD advised that it would publish in the Federal Register
a list of mortgagees, which have had their Origination Approval
Agreements terminated.
Termination of Origination Approval Agreement: Approval of a
mortgagee by HUD/FHA to participate in FHA mortgage insurance programs
includes an Origination Approval Agreement (Agreement) between HUD and
the mortgagee. Under the Agreement, the mortgagee is authorized to
originate single-family mortgage loans and submit them to FHA for
insurance endorsement. The Agreement may be terminated on the basis of
poor performance of FHA-insured mortgage loans originated by the
mortgagee. The termination of a mortgagee's Agreement is separate and
apart from any action taken by HUD's Mortgagee Review Board under HUD's
regulations at 24 CFR part 25.
Cause: HUD's regulations permit HUD to terminate the Agreement with
any mortgagee having a default and claim rate for loans endorsed within
the preceding 24 months that exceeds 200 percent of the default and
claim rate within the geographic area served by a HUD field office, and
also exceeds the national default and claim rate. For the quarterly
review period ending September 30, 2010, HUD is terminating the
Agreement of mortgagees whose default and claim rate exceeds both the
national rate and 200 percent of the field office rate.
Effect: Termination of the Agreement precludes branch(es) of the
mortgagee from originating FHA-insured single-family mortgages within
the area of the HUD field office(s) listed in this notice. Mortgagees
authorized to purchase, hold, or service FHA-insured mortgages may
continue to do so.
Loans that closed or were approved before the termination became
effective may be submitted for insurance endorsement. Approved loans
are those already underwritten and approved by a DE underwriter, and
cases covered by a firm commitment issued by HUD. Cases at earlier
stages of processing cannot be submitted for insurance by the
terminated branch; however, they may be transferred for completion of
processing and underwriting to another FHA-insured mortgagee with
direct endorsement approval for the area covered by the termination.
Mortgagees are obligated to continue to pay existing insurance premiums
and meet all other obligations associated with insured mortgages.
A terminated mortgagee may apply for reinstatement of the
Origination Approval Agreement if the approval for the affected branch
or branches has been terminated for at least six months and the
mortgagee continues to be an approved mortgagee meeting the
requirements of 24 CFR 202.5, 202.6, 202.7, 202.8 and 202.12. However,
Mortgagee Letter 2010-20 and Final Rule 5356-F-02 at 24 CFR 202
eliminates FHA approval for loan correspondents after December 31,
2010. Therefore, HUD will not accept requests for reinstatement from
loan correspondents after that date. The mortgagee's application for
reinstatement must be in a format prescribed by the Secretary and
signed by the mortgagee. In addition, the application must be
accompanied by an independent analysis of the terminated office's
operations as well as its mortgage production, specifically including
the FHA-insured mortgages cited in its termination notice. This
independent analysis shall identify the underlying cause for the
mortgagee's high default and claim rate. The analysis must be prepared
by an independent Certified Public Accountant (CPA) qualified to
perform audits under Government Auditing Standards as provided by the
Government Accountability Office. The mortgagee must also submit a
written corrective action plan to address each of the issues identified
in the CPA's report, along with evidence that the plan has been
implemented. The application for a new Agreement should be in the form
of a letter, accompanied by the CPA's report and corrective action
plan. The request should be sent to the Director, Office of Lender
Activities and Program Compliance, 451 Seventh Street, SW., Room B133-
P3214, Washington, DC 20410-8000 or by courier to 490 L'Enfant Plaza,
East, SW., Suite 3214, Washington, DC 20024-8000.
Action: The following mortgagees have had their Origination
Agreements terminated by HUD:
----------------------------------------------------------------------------------------------------------------
Mortgagee branch HUD office Termination Homeownership
Mortgagee name office address jurisdictions effective date centers
----------------------------------------------------------------------------------------------------------------
Consumer Mortgage Group, Inc.... 1460 Route 9 North, Newark............ 1/18/11 Philadelphia.
Woodbridge, NJ
07095.
Equity Source Home Loans LLC.... 150 Airport Rd., Newark............ 1/18/11 Philadelphia.
Ste 1100,
Lakewood, NJ 08701.
Mountain States Mortgage Center. 1333 E 9400 S, Salt Lake City.... 2/28/11 Denver.
Sandy, UT 84093..
Mountain States Mortgage Center. 1333 E 9400 S, Indianapolis...... 2/28/11 Atlanta.
Sandy, UT 84093..
Integrity Mortgage & Financial 5528 Library Lane, Denver............ 1/11/11 Denver.
Inc. Colorado Springs,
CO 80918.
----------------------------------------------------------------------------------------------------------------
[[Page 22122]]
Dated: March 29, 2011.
Joseph F. Smith,
General Deputy Assistant Secretary for Housing--Federal Housing
Commissioner.
[FR Doc. 2011-9504 Filed 4-19-11; 8:45 am]
BILLING CODE 4210-67-P