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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Housing and Urban Development Department

Docket ID: [Docket No. 5161-N-04]

NOTICE: NOTICES

DOCUMENT ACTION: Notice.

SUBJECT CATEGORY: Credit Watch Termination Initiative

DOCUMENT SUMMARY: This notice advises of the cause and effect of termination of Origination Approval Agreements taken by HUD's Federal Housing Administration (FHA) against HUDapproved mortgagees through the FHA Credit Watch Termination Initiative. This notice includes a list of mortgagees which have had their Origination Approval Agreements terminated.

SUMMARY: Credit Watch Termination Initiative,

SUPPLEMENTAL 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 singlefamily mortgage loans and submit them to FHA for insurance endorsement. The Agreement may be terminated on the basis of poor performance of FHAinsured 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 34th 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 FHAinsured singlefamily 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
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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 FHAinsured 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 204108000 or by courier to 490 L'Enfant Plaza, East, SW., Suite 3214, Washington, DC 200248000.

Action: The following mortgagees have had their Agreements terminated by HUD:
Mortgagee branch HUD office Termination Homeownership Mortgagee name address jurisdictions effective date centers Assurity Financial Services LLC 6025 S Quebec St Ste Denver, CO........ 3/27/2008 Denver. 220 Englewood, CO
80111.
Benchmark Lending Inc.......... 105 S Wheeler Street Jacksonville, FL.. 3/27/2008 Atlanta. Ste 200 Plant City, FL
33563.
Heartland Funding Corp......... 1442 East Primrose Springfield, MO... 3/27/2008 Denver. Springfield, MO 65804.
Owens Premier Mortgage, LTD.... 4545 Fuller Drive Suite Fort Worth, TX.... 3/27/2008 Denver. 350 Irving, TX 75038.
Orchid Island Treasures LLC.... 115 West Century Road Atlanta, GA....... 1/31/2008 Philadelphia. Paramus, NJ 07652.
Orchid Island Treasures LLC.... 115 West Century Road Atlanta, GA....... 1/31/2008 Philadelphia. Paramus, NJ 07652.
Gatewood Mortgage Corp......... 2646 Southloop West Houston, TX....... 3/27/2008 Denver. Suite 108 Houston, TX
77054.
Citizens Bank.................. 31155 Northwestern Indianapolis, IN.. 3/27/2008 Atlanta. Highway Farmington
Hills, MI 48334.

Dated: May 5, 2008.
Brian D. Montgomery,
Assistant Secretary for HousingFederal Housing Commissioner. [FR Doc. E810533 Filed 51208; 8:45 am]
BILLING CODE 421067P

FOR FURTHER INFORMATION CONTACT The Quality Assurance Division, Office of Housing, Department of Housing and Urban Development, 451 Seventh Street, SW., Room B133P3214, Washington, DC 204108000; telephone (202) 7082830 (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) 8778339.