Agency: "Office of the Assistant Secretary for Housing--
SUMMARY: This notice advises of the cause and effect of termination of Direct Endorsement (DE) approval taken by
FOR FURTHER INFORMATION CONTACT: Quality Assurance Division,
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
Termination of Direct Endorsement Approval: HUD approval of a DE mortgagee authorizes the mortgagee to underwrite single family mortgage loans and submit them to FHA for insurance endorsement. The approval may be terminated on the basis of poor performance of FHA-insured mortgage loans underwritten by the mortgagee. The termination of a mortgagee's DE Approval is separate and apart from any action taken by
Cause: HUD regulations permit HUD to terminate the DE Approval of 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 that exceeds the national default and claim rate.
Effect: Termination of DE Approval precludes the mortgagee from underwriting FHA-insured single-family mortgages within the HUD field office jurisdiction(s) listed in this notice. Mortgagees authorized to 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 those already underwritten and approved by a DE underwriter and cases covered by a firm commitment issued by HUD. Cases at earlier stages of processing cannot be submitted for insurance by the terminated mortgagee; however, the cases may be transferred for completion of processing and underwriting to another mortgagee with DE Approval in that geographic area. Mortgagees must continue to pay existing insurance premiums and meet all other obligations associated with insured mortgages.
A terminated mortgagee may apply for reinstatement if their DE Approval in the affected area or areas has been terminated for at least six months and the mortgagee continues to be an approved mortgagee meeting the requirements of 24 CFR 202.5, 202.6, 202.7, 202.10 and 202.12. The mortgagee's application for reinstatement must be in a format prescribed by the Secretary and signed by the mortgagee. In addition, the application must be accompanied by an independent analysis 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 analysis must be prepared 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 reinstatement must be submitted through the Lender Electronic Assessment Portal (LEAP). The application must be accompanied by the CPA's report and the corrective action plan.
Action: The following mortgagees have had their DE Approval terminated by HUD:
Mortgagee name Mortgagee home office address HUD office jurisdiction Termination effective date Homeownership center
CityWorth Mortgage LLC 11781 Lee Jackson Memorial Highway, Atlanta 12/5/19 Philadelphia. Fairfax, VA22033 CityWorth Mortgage LLC 11781 Lee Jackson Memorial Highway, Greensboro 12/5/19 Philadelphia. Fairfax, VA22033 CityWorth Mortgage LLC 11781 Lee Jackson Memorial Highway, Pittsburgh 12/5/19 Philadelphia. Fairfax, VA22033 CityWorth Mortgage LLC 11781 Lee Jackson Memorial Highway, Washington 12/5/19 Philadelphia. Fairfax, VA22033 The Home Lending Group LLC215 Katherine Drive Flowood, MS39232 Jackson 12/5/19 Atlanta.
General Deputy Assistant Secretary for Housing.
Citation: "85 FR 1820"
Document Number: "FR-6193-N-01"
Federal Register Page Number: "1820"