Today HUD released it’s Administrative Actions from the Mortgagee Review Board. Read the Federal Register PDF here. There were 905 lenders that failed to meet requirements for HUD’s annual recertification for FHA approval. The Mortgagee Review Board voted to immediately withdraw FHA approval for a period of one year for each of the 905 lenders. “The Board took this action because the lenders were not in compliance with the Department’s annual recertification requirements.”
Granted, some of the lenders on this list are no longer in business such as MILA or were taken over by other banks like Washington Mutual. Yet 905 is quite a high number and some of the names on the list surprised me. Out of the 905 here are the banks, lenders, or brokers from Washington State:
Bank of Clark County, Vancouver
Callycorp Financial, Vancouver
Capstone, Inc., Vancouver
Compass Mortgage, Edmonds
First Independent Bank, Vancouver
Full Circle Financial, Kent
JD Myers Financial, Lake Stevens
MILA, Mountlake Terrace
Mortgage Broker Associates, Lynnwood
NHI Home Mortgage, Federal Way
Park Place Financial, Redmond
Pierce Mortgage, Tacoma
Puget Sound Mortgage, Edmonds
Response Mortgage, Bellevue
RTL Financial, Bellevue
Top Mortgage Bankers, Bellingham
View Point Lending, Marysville
Washington Mutual
Western States, Bellevue
To check on the current default rate of your favorite FHA lender, check out the Neighborhood Watch website.
I’m guessing FHA Streamlines are probably the most seriously delinquent. But that is not a reflection on the originating lender per se, it is more a reflection directly on the feet of FHA foolish guidelines. Why? No appraisal needed at the time.
The lender with the highest delinquency rate in WA State was doing FHA purchases like mad right after the subprime market collapsed and everyone was scrambling to get FHA approval. During 08 and 09, that bank had a widely known reputation in the Pierce County Realtor market as having an employee who could get a loan through FHA when the borrower had been turned down everywhere else. So for at least the TOP lender, it was purchases and not refis.
A bunch of that seems to just be clean up of places that are no longer around. I wonder when “heavier” enforcement will start taking place. Do you feel FHA will get tougher with their enforcement and start suspending more lenders, or do you think this was more windowdressing?
I am sure some of these lenders were shady, but much of FHA defaults have to do with their own lax underwriting. This is why all the lenders already have pretty hefty overlays on top of FHA’s guidelines. FHA thinks they are making news saying that you need a 580 FICO score now when most lenders haven’t gone below 640 in more than a year on FHA loans.
Hi Michael,
Yes, some of these lenders were already gone but others named are still actively originating. Yes, I think FHA will need to start cracking down, especially the lenders or brokers with the highest FHA default rates in each state.
Hi Russ,
Yes, you’re right. FHA can sometimes be 2 years behind the curve.