[Federal Register Volume 65, Number 143 (Tuesday, July 25, 2000)]
[Notices]
[Pages 45788-45789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18745]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4513-N-04]
Credit Watch Termination Initiative
AGENCY: Office of 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 against HUD-approved mortgagees through its Credit Watch
Termination Initiative. This notice includes a list of mortgagees which
have had their Origination Approval Agreements (Agreements) terminated.
FOR FURTHER INFORMATION CONTACT: The Quality Assurance Division, Office
of Housing, Department of Housing and Urban Development, 451 Seventh
St. SW, Room B133-P3214, Washington, DC 20410; telephone (202) 708-2830
(this is not a toll-free number). Persons with hearing or speech
impairments may access that number via 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 the
HUD 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 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 third review
period, HUD is only terminating the Agreement of mortgagees whose
default and claim rate exceeds both the national rate and 300 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.
[[Page 45789]]
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 set forth 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, or by courier
to 490 L'Enfant Plaza, East, S.W., 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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Allied Mortgage Capital Corp. 513 East Center Street, Memphis, TN.... 06/02/2000 Atlanta.
Kingsport, TN 37660.
Challenge Mortgage Corp...... 15 Spinning Wheel Road, STE Chicago, IL.... 06/05/2000 Atlanta.
426, Hinsdale, IL 60521.
First Guaranty Mortgage Corp. 8180 Greensboro Dr., STE 1175, Richmond, VA... 06/02/2000 Philadelphia.
McLean, VA 22102.
First Republic Mortgage Corp. 6230 Fairview RD #200, Greensboro, NC. 03/20/2000 Atlanta.
Charlotte, NC 28210.
General Mortgage Corp........ 23880 Woodward Avenue, Pleasant Detroit, MI.... 06/02/2000 Philadelphia.
Ridge, MI 48069.
Wells Fargo Home Mortgage Inc 14402 John Humphrey Drive, Chicago, IL.... 06/02/2000 Atlanta.
Orland Park, IL 60462.
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Dated: July 17, 2000.
William C. Apgar,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 00-18745 Filed 7-24-00; 8:45 am]
BILLING CODE 4210-27-P