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Credit Watch Termination Initiative

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Office of Assistant Secretary for Housing-Federal Housing Commissioner, HUD.




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.

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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.

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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.


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 second 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.


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.Start Printed Page 16217

A terminated mortgagee may request to have its authority to originate FHA loans reinstated no earlier that six months after the effective date of the Termination. The request, addressed to the Director, Office of Lender Activities and Program Compliance, should describe any actions taken (e.g., changes in operations and/or personnel) to eliminate the cause(s) of the poor loan performance that led to the Termination.


The following mortgagees have had their Agreements terminated by HUD:

Mortgagee nameMortgagee branch addressHUD office jurisdictionsTermination effective dateHome ownership centers
Atlantic Vanguard Mortgage dba First Advantage Mortgage251 Maitland Ave., Suite 304 Altamonte Springs, FL 32701Orlando, FL01/17/2000Atlanta.
CTX Mortgage Company151 Kalmus STE J-4 Costa Mesa, CA 92626Los Angeles, CA11/01/1999Santa Ana.
Embassy Mortgage Corp6817 W 167th St. Tinley Park, IL 60477Chicago, IL01/21/2000Atlanta.
Paradigm Mortgage Associates Inc7845 Baymeadows Way Jacksonville, FL 32256Coral Gables, FL11/01/1999Atlanta.
RE Mortgage Group dba American Pacific Mortgage Corp8141 E Kaiser Blvd, Suite 212 Anaheim Hills, CA 92808Santa Ana, CA01/21/2000Santa Ana.
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Dated: March 21, 2000.

William C. Apgar,

Assistant Secretary for Housing-Federal Housing Commissioner.

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[FR Doc. 00-7421 Filed 3-24-00; 8:45 am]