Mortgage lenders east and west of the Mississippi lost their approvals to originate Federal Housing Administration-insured loans.
Under its Credit Watch Termination Initiative, the U.S. Department of Housing and Urban Development terminated the Origination Approval Agreements of three lenders, according to a federal notice. The agreement authorizes mortgagees "to originate single-family mortgage loans and submit them to FHA for insurance endorsement."
Lifetime Financial Services, in San Antonio, Texas; Peoples Home Equity, in Nashville, Tenn.; and Weststar Mortgage Corp. in Richmond, Va., were the latest mortgagees to lose their approvals, HUD reported.
HUD said it takes such actions when loans originated by a particular mortgagee perform more poorly than other loans in the area. The agency's 2006 regulations call for termination when the default and claim rate for loans endorsed during the prior two years exceeds 200 percent of the national rate and 200 percent of the rate for the HUD region served by the local field office.
Terminated branches can apply for a new origination agreement after six months if an independent review by a certified public accountant confirms the underlying causes for termination have been remedied.