[Federal Register: June 26, 2007 (Volume 72, Number 122)]
[Notices]
[Page 35061-35062]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26jn07-53]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4513-N-28]
Credit Watch Termination Initiative
AGENCY: Office of the 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 the FHA
Credit Watch Termination Initiative. This notice includes a list of
mortgagees which have had their Origination Approval Agreements
terminated.
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 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 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 30th review
period, 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 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 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, if there has been no Origination Approval Agreement for at
least six months, and if 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
[[Page 35062]]
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 provided 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 20410-8000 or by courier to 490
L'Enfant Plaza, East, SW., Suite 3214, Washington, DC 20024-8000.
Action: The following mortgagees have had their Agreements
terminated by HUD:
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Mortgagee branch HUD office Termination
Mortgagee name address jurisdictions effective date Homeownership centers
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AAA Worldwide Financial Co.... 15400 Knoll Trail Dallas................ 3/21/2007 Denver.
Drive, Ste. 401,
Dallas, TX 75248.
First Alliance Mortgage Co.... 32100 Telegraph Detroit............... 2/6/2007 Philadelphia.
Road, Ste 205,
Bingham Farms,
MI 48025.
First Alternative Mortgage 101 Cordell Road, Albany................ 4/2/2007 Philadelphia.
Corp. Schenectady, NY
12304.
GSF Mortgage Corp............. 411 Hamilton Springfield........... 3/20/2007 Atlanta.
Boulevard, Ste
1020, Peoria, IL
61602.
Loanamerica Home Mortgage Inc. 1327 Empire Houston............... 2/6/2007 Denver.
Central Drive,
Ste 114, Dallas,
TX 75247.
Northwood Credit Inc.......... 12700 Hillcrest Dallas................ 2/6/2007 Denver.
Road < greek-
i>230, Dallas,
TX 75230.
Pinnacle Mortgage Funding LLC. 250 E 96th Indianapolis.......... 4/2/2007 Atlanta.
Street, Ste 125,
Indianapolis, IN
46240.
Union Federal Bank 45 N Pennsylvania Greensboro............ 2/6/2007 Atlanta.
Indianapolis. Street,
Indianapolis, IN
46204.
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Dated: June 14, 2007.
Brian D. Montgomery
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. E7-12291 Filed 6-25-07; 8:45 am]
BILLING CODE 4210-67-P