[Federal Register: March 21, 2003 (Volume 68, Number 55)]
[Notices]
[Page 13941-13943]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr21mr03-74]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4513-N-11]
Credit Watch Termination Initiative
AGENCY: Office of Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Notice.
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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 its Credit
Watch Termination Initiative. This notice includes a list of mortgagees
which have had their Origination Approval Agreements (Agreements)
terminated.
FOR FURTHER INFORMATION CONTACT: The Quality Assurance Division, Office
of Housing, Department of Housing and Urban Development, 451 Seventh
St., SW., Room B133-P3214, Washington, DC 20410; telephone (202) 708-
2830 (this is not a toll free number). Persons with hearing- or speech-
impairments may access that number via TTY by calling the Federal
Information Relay Service at (800) 877-8339.
SUPPLEMENTARY INFORMATION: HUD has the authority to address
deficiencies in
[[Page 13942]]
the performance of lenders' loans as provided in the HUD mortgagee
approval regulations at 24 CFR 202.3. On May 17, 1999 (64 FR 26769),
HUD published a notice 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 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 thirteenth
review period, HUD is only terminating the Agreement of mortgagees
whose default and claim rate exceeds both the national rate and 300
percent of the field office rate.
Effect: Termination of the Agreement precludes that branch(s) 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: (1) Those already underwritten and approved by a Direct
Endorsement (DE) underwriter employed by an unconditionally approved DE
lender; and (2) 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 mortgagee or branch
authorized to originate FHA insured mortgages in that area. 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 a new Origination Approval
Agreement if: (1) the mortgagee continues to be an approved mortgagee
meeting the requirements of 24 CFR 202.5, 202.6, 202.7, 202.8 or 202.10
and 202.12; (2) there has been no Origination Approval Agreement for at
least six months; and (3) the Secretary determines that the underlying
causes for termination have been remedied. To enable the Secretary to
ascertain whether the underlying causes for termination have been
remedied, a mortgagee applying for a new Origination Approval Agreement
must obtain an independent review 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 review must be conducted and issued by an
independent Certified Public Accountant (CPA) qualified to perform
audits under Government Auditing Standards as set forth by the General
Accounting 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 or by courier to 490 L'Enfant Plaza, East, SW., Suite 3214,
Washington, DC 20024.
Action: The following mortgagees have had their Agreements
terminated by HUD:
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Termination
Mortgagee name Mortgagee branch address HUD office jurisdictions effective Home ownership centers
date
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American Capital Mortgage Bankers LTD. 1981 Marcus Ave Ste C112, New York, NY......................... 01/09/2003 Philadelphia.
Lake Success, NY 11042.
American International Mortgage 2001 Marcus Ave Ste S168, New York, NY......................... 01/09/2003 Philadelphia.
Bankers Inc.. Lake Success, NY 11042.
Automated Financial Services.......... 5500 S Redwood Road Ste Salt Lake City, UT................... 01/09/2003 Denver.
201, Salt Lake City, UT
84123.
Century Funding LTD................... 4128 Steve Reynolds Blvd, Atlanta, GA.......................... 01/09/2003 Atlanta.
Norcross, GA 30093.
Cornerstone Mortgage Group LTD........ 1055 East Tropicana Ste Las Vegas, NV........................ 01/10/2003 Santa Ana.
425, Las Vegas, NV 89119.
Discover Mortgage Inc................. 5736 Osuna NE 9, New Mexico, NM....................... 01/09/2003 Denver.
Albuquerque, NM 87109.
Encore Mortgage Service............... 1010 Laurel Oak Corp Ctr Camden, NJ........................... 01/10/2003 Philadelphia.
301, Voorhees, NJ 08043.
Hennessy Mortgage Group Inc........... 904 N Crowley Road Ste D, Fort Worth, TX....................... 01/09/2003 Denver.
Crowley, TX 76036.
Home Mortgage Inc..................... 7200 W 13TH Ste 4, Topeka, KS........................... 01/10/2003 Denver.
Wichita, KS 67212.
Southern Finance Mortgage Corp........ 10251 Sunset Drive Ste Florida State, FL.................... 01/13/2003 Atlanta.
103, Miami, FL 33173.
US Mortgage Finance Corp.............. 602 Chadds Ford Ave, Philadelphia, PA..................... 11/17/2002 Philadelphia.
Chadds Ford, PA 19317.
White Oak Mortgage Group LLC.......... 7101 Creedmoor Rd, Ste Richmond, VA......................... 11/17/2002 Philadelphia.
101, Raleigh, NC 27613.
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Dated: Dated: March 12, 2003.
John C. Weicher,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 03-6744 Filed 3-20-03; 8:45 am]
BILLING CODE 4210-27-P