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HUD reported 8 firms that lost direct endorsement approval

Jan. 25, 2011

By staff

Just one day after its disclosure that 15 mortgagees lost approval to originate loans insured by the Federal Housing Administration, the agency reported that the direct-endorsement authority at eight mortgagees was revoked.

On Monday, a public filing from the Housing and Urban Development Department indicated that the origination approval agreements for 15 mortgagees were terminated as part of the Credit Watch Termination Initiative. Mortgagees can lose their approval if their default and claim rates exceed the national and field office rates by at least 200 percent.

Tuesday, also as part of the Credit Watch initiative, HUD reported that eight mortgagees lost their FHA direct-endorsement approval.

"The approval
may be terminated on the basis of poor performance of FHA-insured mortgage loans underwritten by the mortgagee," today's filing stated. "For the quarterly review period ending Sept. 30, 2010, HUD is terminating the DE Approval of mortgagees whose default and claim rate exceeds both the national rate and 250 percent of the field office rate."

FHA loans that are already approved at the companies can still be submitted for FHA endorsement, but all other loans need to be re-underwritten elsewhere.

Among companies to lose approval were Birmingham Bancorp Mortgage Corp.'s West Bloomfield, Mich., location on Nov. 15 and MVB Mortgage Corp.'s Southfield, Mich., office on Nov. 16. Both mortgagees were among the 16 to lose FHA approval yesterday.

CMG Mortgage Inc.'s San Ramon, Calif., office was also on today's list, losing its approval on Dec. 14. CMG along with GMAC Bank were named as defendants in an October 2008 lawsuit filed by Ramsden Inc. claiming that the two firms infringed on its patent.

Another of the mortgagees listed in today's actions was the Atlanta location of Pine State Mortgage Corp., which lost direct endorsement approval on Nov. 15. But a Nov. 2 notice from HUD indicated that Pine State had already lost its direct endorsement approval authority.

Pine State was among 15 mortgagees that faced a subpoena from HUD's Office of the Inspector General in January 2010 over the poor performance of its originations.

Popular Mortgage Corp.'s Hialeah, Fla., office was listed as losing its authority on Nov. 15. Popular was one of 127 mortgagees that HUD said in December failed to meet annual recertification requirements, and it lost FHA Title I and Title II approval for one year.

HUD's filing noted that two direct-endorsement approvals were terminated for Universal Mortgage in Mequon, Wis., on Nov. 15.

Back in April 2010, Universal issued a bulletin to its mortgage brokers indicating that it would halt new registrations immediately, cease approving mortgage loans and stop funding loans. A filing with the Wisconsin Department of Workforce Development at the time indicated that the company was "undertaking a business closing of its Universal Mortgage Corp. corporate headquarters facility."

Also losing its direct-endorsement approval on Nov. 15 was a Plano, Texas, facility of NTFN Inc., according to HUD's filing.

All of the terminated mortgagees can re-apply for approval after six months if they can prove they cured the performance deficiencies.

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