[Federal Register Volume 72, Number 122 (Tuesday, June 26, 2007)]
[Notices]
[Pages 35061-35062]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-12291]


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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 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