2010-8029. Credit Watch Termination Initiative

AGENCY:

Office of the Assistant Secretary for Housing—Federal Housing Commissioner, HUD.

ACTION:

Notice.

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.

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 [phone] (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 [phone].

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 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 41st review period, 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 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 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 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 Agreements terminated by HUD:

Mortgagee name	Mortgagee branch address	HUD office jurisdictions	Termination effective date	Homeownership centers
1st Continental Mortgage, Inc	2691 E. Oakland Park Blvd, Suite 203, Fort Lauderdale, FL 33306	Columbia	1/29/2010	Atlanta.
1st Continental Mortgage, Inc	2691 E. Oakland Park Blvd, Suite 203, Fort Lauderdale, FL 33306	Greensboro	1/29/2010	Atlanta.
AAA Worldwide Financial Company	5057 Keller Springs Rd., Addison, TX 75001	San Antonio	11/4/2009	Denver.
Acclaim Mortgage	2200 S. Valley Highway, Suite A, Denver, CO 80222	Denver	1/29/2010	Denver.
Ace Mortgage Funding, LLC	7820 Innovation Blvd., Suite 300, Indianapolis, IN 46278	Indianapolis	11/4/2009	Atlanta.
Ace Mortgage Funding, LLC	7820 Innovation Blvd., Suite 300, Indianapolis, IN 46278	Tampa	11/4/2009	Atlanta.
Ace Mortgage Funding, LLC	7820 Innovation Blvd., Suite 300, Indianapolis, IN 46278	Denver	11/4/2009	Denver.
Ace Mortgage Funding, LLC	7820 Innovation Blvd., Suite 300, Indianapolis, IN 46278	Minneapolis	11/4/2009	Denver.
Ace Mortgage Funding, LLC	7820 Innovation Blvd., Suite 300, Indianapolis, IN 46278	Las Vegas	11/4/2009	Santa Ana.
Allen Mortgage Company, LLC	1675 S. Berry Knoll Blvd., Centennial Park, AZ 86021	Dallas	1/29/2010	Denver.
American Eagle Mortgage Corporation	6145 Park Sq., Suite 4, Lorain, OH 44053	Columbus	1/29/2010	Atlanta.
Bergin Financial, Inc.	29200 North Western Hwy, Suite 350, Southfield, MI 48034	Chicago	11/4/2009	Atlanta.
Bergin Financial, Inc.	29200 North Western Hwy, Suite 350, Southfield, MI 48034	Indianapolis	11/4/2009	Atlanta.
Cash Fast Finance, LLC	2800 North 44th Street, Suite 1100, Phoenix, AZ 85008	Phoenix	11/4/2009	Santa Ana.
First Mortgage Corporation	3230 Fallow Field Drive, Diamond Bar, CA 91765	Santa Ana	11/4/2009	Santa Ana.
Freedom Plus Mortgage Corporation	43053 Margarita Road, Suite B108, Temecula, CA 92452	Santa Ana	1/29/2010	Santa Ana.
Homebridge Mortgage Bankers	60 Oak Drive, Syosset, NY 11791	Washington, DC	11/4/2009	Philadelphia.
J and C Investment Properties Corp.	4907 NW 43rd St., Suite D, Gainesville, FL 32606	Greensboro	1/29/2010	Atlanta.
Lendamerica Home Loans, Inc.	2121 Ponce De Leon Blvd., Suite 10, Coral Gables, FL 33134	Miami	1/29/2010	Atlanta.
Loan Network, LLC	1600 Lind Ave. SW, Suite 180, Renton, WA 98057	Seattle	1/29/2010	Santa Ana.
Paramount Mortgage, Inc	2216 Forest Park Blvd., Fort Worth, TX 76110	Fort Worth	1/29/2010	Denver.
Residential Loan Centers of America	2700 S. River Road, Suite 400, Des Plaines, IL 60018	Jacksonville	11/4/2009	Atlanta.
Residential Loan Centers of America	2700 S. River Road, Suite 400, Des Plaines, IL 60018	Tampa	11/4/2009	Atlanta.
State Lending Corporation	9835 Sunset Drive, Suite 108, Miami, FL 33173	Miami	11/4/2009	Atlanta.

Dated: April 1, 2010.

David H. Stevens,

Assistant Secretary for Housing—Federal Housing Commissioner.