Credit Watch Termination Initiative Termination of Direct Endorsement (DE) Approval, 61165-61166 [2010-24829]

Agencies

• DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Federal Register Volume 75, Number 191 (Monday, October 4, 2010)]
[Notices]
[Pages 61165-61166]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-24829]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5411-N-04]


Credit Watch Termination Initiative Termination of Direct 
Endorsement (DE) Approval

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 
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 which have had their DE Approval 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 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 Approval Agreements 
terminated. On January 21, 2010 HUD issued Mortgagee Letter 2010-03 
which advised the extended procedures for

[[Page 61166]]

terminating Underwriting Authority of Direct Endorsement mortgagees.
    Termination of Direct Endorsement Approval: Approval of a DE 
mortgagee by HUD/FHA 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's regulations at 24 CFR 
part 25.
    Cause: HUD's regulations permit HUD to terminate the DE Approval 
with any mortgagee having a default and claim rate for loans endorsed 
within the preceding 24 months that exceeds 300 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 quarterly 
review period ending December 31, 2009, HUD is terminating the DE 
Approval of mortgagees whose default and claim rate exceeds both the 
national rate and 300 percent of the field office rate.
    Effect: Termination of the DE Approval precludes the mortgagee from 
underwriting 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 mortgagee; however, the cases may be transferred for 
completion of processing and underwriting to another mortgagee with DE 
Approval 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 reinstatement of the DE 
Approval if the DE Approval for 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 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 DE Approvals 
terminated by HUD:

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                                                                HUD office       Termination     Homeownership
        Mortgagee name            Mortgagee branch address     jurisdictions   effective date       centers
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Alacrity Lending Co...........  2535 E Southlake Blvd.,      Fort Worth......        7/9/2010  Denver.
                                 Suite 100, Southlake, TX
                                 76092.
Cambridge Home Capital LLC....  80 Cuttermill Road, Suite    New York........       6/24/2010  Philadelphia.
                                 408, Great Neck, NY 11021.
Freedom Mortgage Corp.........  907 Pleasant Valley Avenue,  San Antonio.....        7/1/2010  Denver.
                                 Mount Laurel, NJ 08054.
Pierce Commercial Bankk.......  1722 S Union Avenue,         Seattle.........        7/1/2010  Santa Ana.
                                 Tacoma, WA 98405.
Universal Lending Corp........  6775 E Evans Avenue,         Houston.........        7/9/2010  Denver.
                                 Denver, CO 80224.
Universal Lending Corp........  6775 E Evans Avenue,         Kansas City.....        7/9/2010  Denver.
                                 Denver, CO 80224.
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    Dated: September 23, 2010.
David H. Stevens,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. 2010-24829 Filed 10-1-10; 8:45 am]
BILLING CODE 4210-67-P