[Federal Register Volume 69, Number 108 (Friday, June 4, 2004)]
[Notices]
[Pages 31631-31632]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-12649]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4513-N-16]


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 18th 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 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

[[Page 31632]]

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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                                                                                                           Termination
            Mortgagee name                 Mortgagee branch address        HUD office  jurisdictions      effective date       Home ownership centers
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Allied Home Mortgage Capital..........  251 Keisler Drive, Ste 100,     Greensboro, NC................          2/17/2004  Atlanta.
                                         Cary, NC 27511.
Americap Mortgage Corp................  1979 Lakeside Parkway, Ste      Atlanta, GA...................           4/1/2004  Atlanta.
                                         450, Tucker, GA 30084.
Centurion Mortgage Corp...............  5402 D Gateway Centre, Flint,   Grand Rapids, MI..............           4/1/2004  Philadelphia.
                                         MI 48507.
CH Mortgage Co. I LTD.................  1100 South Tryon St., Ste 101,  Greensboro, NC................           4/1/2004  Atlanta.
                                         Charlotte, NC 28203.
Diversifed Mortgage, Inc..............  26133 U.S. 19 North, Ste 412,   Tampa, FL.....................           4/1/2004  Atlanta.
                                         Clearwater, FL 33763.
Equity One, Inc.......................  301 Lippincott Drive, Marlton,  Philadelphia, PA..............           4/1/2004  Philadelphia.
                                         NJ 08053.
First Florida State Mortgage Corp.....  2090 Sarno Road, Melbourne, FL  Orlando, FL...................           4/1/2004  Atlanta.
                                         32935.
First Rochester Mortgage Corp.........  2024 W Henrietta Rd., Ste 2A,   Buffalo, NY...................           4/1/2004  Philadelphia.
                                         Rochester, NY 14623.
First City Mortgage, Inc..............  325 Country Club Drive,         Atlanta, GA...................           4/1/2004  Atlanta.
                                         Stockbridge, GA 30281.
Go Blue, Inc..........................  5583 Davis Blvd., Ste 200,      Fort Worth, TX................           4/1/2004  Denver.
                                         North Richland Hill, TX 76180.
Homeowners Mortgage of America, Inc...  501 Village Trace Bldg.,        Atlanta, GA...................           4/1/2004  Atlanta.
                                         Marietta, GA 30067.
Lenders Choice Mortgage Services, Inc.  13930 SW 47 St. 203,   Miami, FL.....................          2/17/2004  Atlanta.
                                         Miami, FL 33175.
Lodge Mortgage, Inc...................  19221 I 45 South, Ste 330,      Houston, TX...................           4/1/2004  Denver.
                                         Conroe, TX 77385.
Lone Star Realty Investment, Inc......  620 E Southlake Blvd.,          Fort Worth, TX................           4/1/2004  Denver.
                                         Southlake, TX 76092.
McKinley Mortgage LLC.................  9825 Kenwood Rd., Ste 203,      Cincinnati, OH................           4/1/2004  Philadelphia.
                                         Cincinnati, OH 45242.
Mortgage Express, Inc.................  374 Meridian Parke Ln, Ste A,   Indianapolis, IN..............           4/1/2004  Atlanta.
                                         Greenwood, IN 46142.
Sensible Mortgage Solutions, Inc......  6112 Arlington Road,            Jacksonville, FL..............          2/17/2004  Atlanta.
                                         Jacksonville, FL 32211.
Tropical Mortgage of North Florida,     2002 Southside Blvd., Ste 100-  Jacksonville, FL..............           4/1/2004  Atlanta.
 Inc.                                    C, Jacksonville, FL 32216.
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    Dated: May 21, 2004.
Sean Cassidy,
General Deputy, Assistant Secretary for Housing.
[FR Doc. 04-12649 Filed 6-3-04; 8:45 am]
BILLING CODE 4210-27-P