[Federal Register Volume 84, Number 67 (Monday, April 8, 2019)]
[Notices]
[Pages 13949-13950]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06863]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-6142-N-01]
Credit Watch Termination Initiative Termination of Direct
Endorsement (DE) Approval
AGENCY: Office of the Assistant Secretary for Housing-Federal Housing
[[Page 13950]]
Commissioner, Department of Housing and Urban Development (HUD).
ACTION: Notice.
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SUMMARY: This notice advises of the cause and effect of termination of
Direct Endorsement (DE) approval 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 that have had their DE Approval terminated.
FOR FURTHER INFORMATION CONTACT: 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)
708-5997 (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, 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 notice,
HUD advised that it would publish in the Federal Register a list of
mortgagees that have had their Approval Agreements terminated. HUD
Handbook 4000.1 section V.E.3.a.iii outlines current procedures for
terminating Underwriting Authority of Direct Endorsement mortgagees.
Termination of Direct Endorsement Approval: HUD approval of a DE
mortgagee authorizes the mortgagee to underwrite single family mortgage
loans and submit them to FHA for insurance endorsement. The approval
may be terminated on the basis of poor performance of FHA-insured
mortgage loans underwritten by the mortgagee. The termination of a
mortgagee's DE Approval is separate and apart from any action taken by
HUD's Mortgagee Review Board under HUD regulations at 24 CFR part 25.
Cause: HUD regulations permit HUD to terminate the DE Approval of
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
that exceeds the national default and claim rate.
Effect: Termination of DE Approval precludes the mortgagee from
underwriting FHA-insured single-family mortgages within the HUD field
office jurisdiction(s) listed in this notice. Mortgagees authorized to
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 mortgagee; however, the cases may be transferred for
completion of processing and underwriting to another mortgagee with DE
Approval in that geographic area. Mortgagees must continue to pay
existing insurance premiums and meet all other obligations associated
with insured mortgages.
A terminated mortgagee may apply for reinstatement if their DE
Approval in the affected area or areas 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, 202.10 and
202.12. 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 reinstatement must be
submitted through the Lender Electronic Assessment Portal (LEAP). The
application must be accompanied by the CPA's report and the corrective
action plan.
Action: The following mortgagees have had their DE Approval
terminated by HUD:
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Mortgagee home HUD office Termination
Mortgagee name office address jurisdiction effective date Homeownership center
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First Hallmark Mortgage 1 Executive Newark................ 7/19/16 Philadelphia.
Corporation. Drive, Suite
130, Somerset,
NJ 08873-4002.
CityWorth Mortgage LLC........ 11781 Lee Philadelphia.......... 5/1/18 Philadelphia.
Jackson,
Memorial
Highway,
Fairfax, VA
22033.
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Dated: March 28, 2019.
Brian Montgomery,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2019-06863 Filed 4-5-19; 8:45 am]
BILLING CODE 4210-67-P