[Federal Register Volume 69, Number 47 (Wednesday, March 10, 2004)]
[Notices]
[Pages 11452-11454]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-5396]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4513-N-15]


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 the 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 17th review 
period, HUD is only 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

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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 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.
    Action: The following mortgagees have had their Agreements 
terminated by HUD:

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                                                                 HUD office       Termination     Home ownership
        Mortgagee name            Mortgagee branch address      jurisdictions    effective date      centers
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American United Mtg Serv.....  4230 LBJ Freeway Ste 626       Dallas, TX......       11/29/2003  Denver
                                Dallas, TX 75244.
American United Mtg Serv.....  4230 LBJ Freeway Ste 626       Fort Worth, TX..       11/29/2003  Denver
                                Dallas, TX 75244.
Approval First Mortgage......  3510 S Florida Ave Ste 102     Tampa, FL.......       12/26/2003  Atlanta
                                Lakeland, FL 33803.
BSM Financial LP.............  16479 Dallas Parkway, 211 Addision, TX 75001.
Community Central Mortgage...  85 North Main St. Ste 301 Mt.  Detroit, MI.....       12/26/2003  Philadelphia
                                Clemens, MI 48083.
Enterprise Mortgage..........  14200 Northbrook Dr. San       San Antonio, TX.       12/24/2003  Denver
                                Antonio, TX 78232.
Fortune Mortgage.............  955 Congress Park Dr.          Cincinnati, OH..       12/29/2003  Philadelphia
                                Centerville, OH 45459.
Home Loan Corporation........  1112 East Copeland Rd. Ste     Dallas, TX......       12/24/2003  Denver
                                550, Arlington, TX 76011.
Legacy Mortgage..............  12800 S Ridgeland Ste G Palos  Chicago, IL.....       12/24/2003  Atlanta
                                Heights, IL 60463.
Meier Mortgage...............  7035 Bee Caves Road Ste 103    San Antonio, TX.       11/29/2003  Denver
                                Austin, TX 78746.
Metrociti Mortgage...........  4500 California Ave, 204 Bakersfield, CA 93309.
New Freedom Mortgage.........  5248 So. Pinemont Dr. C-190 Murray, UT 84123.      UT.
Pinnacle Financial...........  2611 Technology Dr. Orlando,   Tampa, FL.......        12/2/2003  Atlanta
                                FL 32804.
Prem Mortgage................  8678 West Spring Mtn Rd,       Las Vegas, NV...       12/24/2003  Santa Ana
                                130, Las Vegas, NV
                                89117.
Premiere Service Mortgage....  297 Buttermilk Pike Fort       Cincinnati, OH..       11/29/2003  Philadelphia
                                Mitchell, KY 41017.
Progressive Mortgage.........  5400 Transportation Blvd Ste   Cleveland, OH...       12/24/2003  Philadelphia
                                8 Cleveland, OH 44125.
RBC Mortgage Company.........  5801 Allentown Road Camp       Baltimore, MD...       12/24/2003  Philadelphia
                                Springs, MD 20746.
Standard Home Mortgage.......  35787 Moravian Dr. Clinton     Detroit, MI.....       12/29/2003  Philadelphia
                                Twp, MI 48035.
Sunpoint Corporation.........  2400 S. Cimarron Rd. Ste 130   Las Vegas, NV...       12/29/2003  Santa Ana
                                Las Vegas, NV 89117.
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[[Page 11454]]

    Dated: March 5, 2004.
John C. Weicher,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 04-5396 Filed 3-9-04; 8:45 am]
BILLING CODE 4210-27-P