[Federal Register Volume 65, Number 209 (Friday, October 27, 2000)]
[Notices]
[Pages 64454-64455]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-27607]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4513-N-05]


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 fourth 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.
    Loans that closed or were approved before the Termination became 
effective may be submitted for insurance

[[Page 64455]]

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, S.W., 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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                                   Mortgagee branch        HUD office       Termination
        Mortgagee name                  address           jurisdictions   effective date  Home ownership centers
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Adana Mortgage Bankers........  400 Perimeter Ctr Ter,  Atlanta, GA.....      08/03/2000  Atlanta.
                                 Ste 170, Atlanta, GA
                                 30346.
Florida Capital Mortgage        228 A Palm Coast Pkwy   Orlando, FL.....      06/04/2000  Atlanta.
 Company.                        NE, Palm Coast, FL
                                 32137.
Irwin Mortgage Corporation....  808 Moorefield Park     Richmond, VA....      08/03/2000  Philadelphia.
                                 Dr, Ste 113,
                                 Richmond, VA 23236.
Kingsway Mortgage Corporation.  1104 Wescove Place,     Los Angeles, CA.      06/04/2000  Santa Ana.
                                 Ste B, West Covina,
                                 CA 92790.
Kingsway Mortgage Corporation.  1104 Wescove Place,     Santa Ana, CA...      06/04/2000  Santa Ana.
                                 Ste B, West Covina,
                                 CA 92790.
Mortgage One Corporation......  16377 Main St, Ste C,   Santa Ana, CA...      08/03/2000  Santa Ana.
                                 Hesperia, CA 92345.
National Charter Mortgage.....  1515 W. 190th Street,   Los Angeles, CA.      06/04/2000  Santa Ana.
                                 Ste 150, Gardena, CA
                                 90248.
Southeast Mortgage Bankers....  3931 Tweedy Blvd,       Los Angeles, CA.      08/03/2000  Santa Ana.
                                 South Gate, CA 90280.
Specialized Financial Services  1909 Central, Ste 200,  Fort Worth, TX..      08/03/2000  Denver.
                                 Bedford, TX 76021.
Sunshine Mortgage Services....  2002 Southside Blvd,    Jacksonville, FL      08/14/2000  Atlanta.
                                 Ste 100,
                                 Jacksonville, FL
                                 32216.
TWG Investments Incorporated..  11760 Central Ave, Ste  Santa Ana, CA...      08/07/2000  Santa Ana.
                                 205, Chino, CA 91710.
Volunteer Trust Mortgage        801 West 7th Street,    Nashville, TN...      06/04/2000  Atlanta.
 Corporation.                    Columbia, TN 38401.
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    Dated: October 17, 2000.
William C. Apgar,
Assistant Secretary for Housing, Federal Housing Commissioner.
[FR Doc. 00-27607 Filed 10-26-00; 8:45 am]
BILLING CODE 4210-27-P