HUD Terminates FHA Approval of 15 Lenders

[_UPDATED: changes have been made to reflect specific Homeownership Center terminations._]

HUD announced this week that it has terminated the Origination Approval Agreements of 15 mortgage lenders' Homeownership Centers (HOC) due to poor performance and high default rates.

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The termination of the Origination Approval Agreement means that the specific HOC is no longer allowed to originate FHA loans.

In addition, the federal agency terminated eight lenders' Direct Endorsement (DE) approval. Lenders with Direct Endorsement agreements are authorized to both originate and underwrite an FHA loan, which saves time in the approval process.

According to two federal registers released by HUD, ""The Agreement may be terminated on the basis of poor performance of FHA-insured mortgage loans originated by the mortgagee.""

They continue, ""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 [250 percent for DE's] percent of the default and claim rate within a geographic area served by a HUD field office and also exceeds the national default and claim rate.""

Loans that were originated or underwritten before the termination date are still effective and may still be submitted for FHA insurance, and cases that had not yet reached that stage may be transferred to other lenders who are still authorized to originate and/or underwrite FHA loans.

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The filing states that the terminated mortgagees are still obligated to pay existing insurance premiums and meet all other obligations associated with insured mortgages.

Terminated mortgagees are eligible to reapply for Origination Approval and Direct Endorsement Approval after six months. Their applications must be accompanied by an analysis of the office's operations that outlines the cause for the mortgagee's high default and claim rates. The analysis must be conducted by an independent party and the mortgagee must also submit a corrective action plan in writing with the application.

The following homeownership centers had their DE Approvals terminated:

* Birmingham Bancorp Mortgage Corp. (Philadelphia, Pennsylvania HOC)
* CMG Mortgage Inc (Atlanta, Georgia HOC)
* MVB Mortgage (Philadelphia, Pennsylvania HOC)
* NTFN Inc (Denver, Colorado HOC)
* Pine State Mortgage Corp (Atlanta, Georgia HOC)
* Popular Mortgage Corp (Atlanta, Georgia HOC)
* Universal Mortgage Corp (Atlanta, Georgia HOC)
* Universal Mortgage Corp (Atlanta, Georgia HOC)

The following homeownership centers had their Origination Approval Agreements terminated:

* Access Mortgage Services Inc (Philadelphia, Pennsylvania HOC)
* Anchor Mortgage (Santa Ana, California HOC)
* Benefit Funding Corp (Philadelphia, Pennsylvania HOC)
* Birmingham Bancorp Mortgage Corp (Philadelphia, Pennsylvania HOC)
* Dedicated Mortgage Associates (Philadelphia, Pennsylvania HOC)
* Equitable Trust Mortgage Corp (Philadelphia, Pennsylvania HOC)
* Equity Source Home Loans LLC (two HOCs located in Philadelphia, Pennsylvania)
* First Performance Mortgage Corp (Philadelphia, Pennsylvania HOC)
* Freedom Mortgage Corp (Atlanta, Georgia HOC)
* Homeland Lending Inc (Atlanta, Georgia HOC)
* Metro Finance Corp (Atlanta, Georgia HOC)
* Moncor Inc (Denver, Colorado HOC)
* MVB Mortgage Corp (Philadelphia, Pennsylvania HOC)
* Signature One Mortgage Inc (Santa Ana, California HOC)
* Valor Financial Services LLC (Atlanta, Georgia HOC)