[Federal Register Volume 65, Number 242 (Friday, December 15, 2000)]
[Notices]
[Pages 78500-78501]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31984]



[[Page 78500]]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4513-N-06]


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 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 the performance of 
lenders' loans as provided in the HUD mortgage 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 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 fifth 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 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 the terminated office's operations 
as well as its mortgagee 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            HUD office jurisdictions         effective           Home ownership centers
                                              address                                                     date
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Carolina Home Mortgage Groups, Inc..  125 Executive Pointe     Columbia, SC.........................   10/27/2000  Atlanta.
                                       Blvd., Columbia, SC
                                       29210.
Heritage Mortgage, LLC..............  1926 North Lake          Atlanta, GA..........................   10/27/2000  Atlanta.
                                       Parkway, Suite 200,
                                       Tucker, GA 30084.
Home Loan Mortgage Corp.............  21250 Boxsprings Rd.     Santa Ana, CA........................   10/27/2000  Santa Ana.
                                       #105, Moreno Valley,
                                       CA 92557.
Home Mortgage Company...............  1118 Main Street,        Birmingham, AL.......................   10/26/2000  Atlanta.
                                       Gardendale, AL 35071.
D & D Funding, Inc..................  494 North Garfield       Los Angeles, CA......................   09/29/2000  Santa Ana.
                                       Avenue, Montebello, CA
                                       90640.

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First Guaranty Mortgage.............  7833 Walker Drive,       Washington, DC.......................   09/29/2000  Philadelphia.
                                       #510, Greenbelt, MD
                                       20770.
Mortgage Capital Resource...........  10535 Foothill Blvd,     Santa Ana, CA........................   09/29/2000  Santa Ana.
                                       Suite 460, Rancho
                                       Cucamonga, CA 91730.
Ryans Express Equities..............  90 Merrick Avenue Ste    New York, NY.........................   09/29/2000  Philadelphia.
                                       620, East Meadow, NY
                                       11554.
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    Dated: November 28, 2000.
William C. Apgar,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 00-31984 Filed 12-14-00; 8:45 am]
BILLING CODE 4210-27-M