[Code of Federal Regulations]

[Title 24, Volume 2]

[Revised as of April 1, 2005]

From the U.S. Government Printing Office via GPO Access

[CITE: 24CFR203.4]



[Page 147-148]

 

                 TITLE 24--HOUSING AND URBAN DEVELOPMENT

 

 CHAPTER II--OFFICE OF ASSISTANT SECRETARY FOR HOUSING--FEDERAL HOUSING 

        COMMISSIONER, DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

 

PART 203_SINGLE FAMILY MORTGAGE INSURANCE--Table of Contents

 

     Subpart A_Eligibility Requirements and Underwriting Procedures

 

Sec.  203.4  Approval of mortgagees for Lender Insurance.



    Each mortgagee that chooses to participate in the Lender Insurance 

program must use the Lender Insurance process to insure all of the 

mortgages that it underwrites, unless the mortgages are ineligible for 

the Direct Endorsement program as provided in Sec.  203.5(b), or unless 

HUD determines that the mortgages are ineligible for the Lender 

Insurance program.

    (a) Direct Endorsement approval. To be approved for the Lender 

Insurance program described in Sec.  203.6, a mortgagee must be 

unconditionally approved for the Direct Endorsement program as provided 

in Sec.  203.5.



[[Page 148]]



    (b) Performance: Claim and default rates. In addition to being 

unconditionally approved for the Direct Endorsement program, a mortgagee 

must have had an acceptable claim and default record for at least 2 

years prior to its application for participation in the Lender Insurance 

program. HUD determines acceptable claim and default record as follows:

    (1) A mortgagee is eligible for the Lender Insurance program if its 

claim and default rate is at or below 150 percent of the national 

average rate for all insured mortgages.

    (2) A mortgagee that operates in a single State (Single State 

mortgagee) may choose to have its claim and default rate compared with 

the average rate in the State in which it operates, in which case the 

Single State mortgagee is eligible for the Lender Insurance program if 

its claim and default rate is at or below 150 percent of the State 

average rate for insured mortgages.

    (c) Annual review. HUD will monitor a mortgagee's eligibility to 

participate in the Lender Insurance program on a yearly basis.

    (d) Termination of approval. If a mortgagee that has been approved 

by HUD for the Lender Insurance program violates the requirements and 

procedures established by the Secretary for such program, or if HUD 

determines that other good cause exists (including, but not limited to, 

HUD's determination that the mortgagee is not using prudent review 

techniques), HUD may immediately terminate the mortgagee's approval to 

participate in the Lender Insurance program, in accordance with section 

256(d) of the National Housing Act (12 U.S.C. 1715z-21(d)). Within 30 

days after receiving HUD's notice of termination, a mortgagee may 

request an informal conference with the Deputy Assistant Secretary for 

Single Family Housing. The conference will be conducted within 30 days 

after HUD receives a timely request for the conference. After the 

conference, the Deputy Assistant Secretary may decide to affirm the 

termination action or to reinstate the mortgagee's Lender Insurance 

program approval. The decision will be communicated to the mortgagee in 

writing and will be deemed a final agency action. Termination of an 

origination approval agreement under part 202 of this chapter or 

termination of Direct Endorsement approval under Sec.  203.3(d)(2) for a 

mortgagee or one or more branch offices automatically terminates Lender 

Insurance approval for the mortgagee or the branch office or offices 

without any further requirement to comply with this paragraph.



[62 FR 30226, June 2, 1997, as amended at 62 FR 65182, Dec. 10, 1997]