[Federal Register Volume 76, Number 76 (Wednesday, April 20, 2011)]
[Notices]
[Pages 22120-22122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-9504]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR- 5511-N-01]


Credit Watch Termination Initiative; Termination of Origination 
Approval Agreements

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.

[[Page 22121]]


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 Sec.  202.3. On May 17, 1999 
HUD published a notice (64 FR 26769), 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 quarterly 
review period ending September 30, 2010, 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 branch(es) 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 those already underwritten and approved by a DE underwriter, and 
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 FHA-insured mortgagee with 
direct endorsement approval for the area covered by the termination. 
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 reinstatement of the 
Origination Approval Agreement if the approval for the affected branch 
or branches has been terminated for at least six months and the 
mortgagee continues to be an approved mortgagee meeting the 
requirements of 24 CFR 202.5, 202.6, 202.7, 202.8 and 202.12. However, 
Mortgagee Letter 2010-20 and Final Rule 5356-F-02 at 24 CFR 202 
eliminates FHA approval for loan correspondents after December 31, 
2010. Therefore, HUD will not accept requests for reinstatement from 
loan correspondents after that date. The mortgagee's application for 
reinstatement must be in a format prescribed by the Secretary and 
signed by the mortgagee. In addition, the application must be 
accompanied by an independent analysis 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 analysis must be prepared 
by an independent Certified Public Accountant (CPA) qualified to 
perform audits under Government Auditing Standards as provided by the 
Government Accountability 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 Origination 
Agreements terminated by HUD:

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                                    Mortgagee branch       HUD office        Termination       Homeownership
         Mortgagee name              office address       jurisdictions    effective date         centers
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Consumer Mortgage Group, Inc....  1460 Route 9 North,  Newark............         1/18/11  Philadelphia.
                                   Woodbridge, NJ
                                   07095.
Equity Source Home Loans LLC....  150 Airport Rd.,     Newark............         1/18/11  Philadelphia.
                                   Ste 1100,
                                   Lakewood, NJ 08701.
Mountain States Mortgage Center.  1333 E 9400 S,       Salt Lake City....         2/28/11  Denver.
                                   Sandy, UT 84093..
Mountain States Mortgage Center.  1333 E 9400 S,       Indianapolis......         2/28/11  Atlanta.
                                   Sandy, UT 84093..
Integrity Mortgage & Financial    5528 Library Lane,   Denver............         1/11/11  Denver.
 Inc.                              Colorado Springs,
                                   CO 80918.
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    Dated: March 29, 2011.
Joseph F. Smith,
General Deputy Assistant Secretary for Housing--Federal Housing 
Commissioner.
[FR Doc. 2011-9504 Filed 4-19-11; 8:45 am]
BILLING CODE 4210-67-P