FHA Issues Extended Procedures:                                          Terminating Underwriting Authority                                                                and                                   Our Solution to Excessive Defaults and Claims WEBSITE QUICK LINKS HOME Mortgage Compliance Service Presentations CORE Compliance About Us Our Clientele News & Views Posts Archive Library Contact Us Website Visit Us! News and Views Visit Us! PRESENTATIONS Mortgage Compliance Due Diligence Forensic Services FHA Examinations Legal Reviews/Remedies CORE Compliance Matrix Loss Mitigation Quality Control HMDA / CRA Licensing Policy Guides/QC Plans IT and IS _______________ 516-442-3456 Email Us Overview At present, HUD exercises its authority to terminate only the loan origination approval authority of a mortgagee. Effective immediately, HUD will systematically review all Direct Endorsement (DE) underwriting mortgagees' defaults (loans 90 or more days' delinquent) and claim rates on loans during the initial 24 months from the date of the commencement of the amortization. HUD, at its option, will exercise its authority to terminate the underwriting authority (Authority) of DE mortgagees with excessive default and claim rates. HUD will notify the mortgagee, before terminating its Authority. The effect of termination of the Authority precludes the mortgagee from underwriting FHA-insured single family loans within the area of the HUD field office(s) listed in the notice. A terminated mortgagee may request to have its Authority reinstated no earlier than six (6) months after the effective date of the termination. HUD will allow Loan Correspondents affected by the termination of a sponsoring mortgagee's Authority to have thirty (30) days to establish a new relationship with another FHA-approved mortgagee before terminating the Loan Correspondent's FHA Approval. Highlights   Frequency and Scope of Reviews: Every three months, HUD will review the rate of defaults and claims on all FHA-insured single family loans. The review is limited to loans with an amortization commencement date within the preceding 24 months. Unacceptable Results: HUD may terminate the Authority of any mortgage with compare ratios that exceed 200% within the preceding 24 months within the geographic area served by a HUD field office and also exceed the national default and claim rate. Thresholds: HUD is now using specific thresholds, and a timetable, to implement the termination of Authority of any mortgagee whose default and claim rate exceeds both the national rate and 300% of the field office rate, with the first review period applying a threshold of 300% compare ratio. For evaluations after December 31, 2010, the threshold will remain constant at 200 percent. Visit our Library for Issuance    Threshold Timetable Chart   Visit our Library for Issuance Our Solution to Reduce Compare Ratios Excessive Defaults and Claims Our "Task Force" operational unit is designed to reduce high  Compare Ratios caused by excessive defaults and claims. Task Force Description Staffed with subject matter experts and skilled auditors Specially designed checklists and automated file screening systems State-of-the-art quality control, compliance, forensics, and modern research facility Scalable up to virtually any size default and claims experience Upload/download large file formats for prompt reviews Located in a secured and safe audit location Our Remedy Comprehensive review of existing defaults and claims for loss mitigation  and loan modification eligibility HUD-FHA and regulatory compliance guidance for the mortgagee Notification to mortgagee of borrower's loss mitigation eligibility Notification of loss mitigation eligibility to the borrower Referrals to expert, nationwide legal counsel to handle loss mitigation and loan modification strategies Monitoring of loss mitigation applications in process Follow-up with servicers to assure proper and timely resolution and notification to HUD-FHA On-going review and loss mitigation of new defaults and claims Call Today: 516-442-3456 Ext: 204 "Task Force"  Visit our Library for Issuance                          Mortgagee Approval for Single Family Programs - Extended Procedures for Terminating Underwriting Authority - Mortgagee Letter 2010-03 (1/21/10) Lenders Compliance Group is a full-service, mortgage risk management firm, providing professional guidance to financial institutions in all areas of mortgage compliance. Specializations Mortgage Compliance Compliance Reviews Forensic Loan Audits FHA Examinations State and Federal Examinations Fannie/Freddie/Ginnie Applications Mortgage Due Diligence Legal Reviews & Remedies Loss Mitigation Compliance Quality Control HMDA & CRA Reviews IT & IS Compliance Statutory Licensing This communication is sent to our valued clients and colleagues, who regularly receive our Advisory Bulletins, Mortgage Compliance Updates,  Compliance Alerts, Licensing Alerts, and News and Views. These publications are free to subscribers. � 2010 Lenders Compliance Group, Inc. All Rights Reserved. Return to Top