this U.S. Department of Housing and Urban Development (HUD) Terminated federal housing administration (FHA) Direct Accreditation Approval open mortgage in Iowa.
“HUD Places Open Mortgage on Credit Watch by Des Moines HOC [homeownership center]this only affects our loans in Iowa. house line.
“With the exception of HOC, our direct authorization authority remains unchanged. We have worked with HUD to resolve the issues related to this situation and are working to resolve them so that we can reapply for Iowa authorization later this year .
Texas-based multi-access lender Open Mortgage originated about $400 million in mortgages in the past 12 months, according to Mortgage Technology Platform Modex.
Last year, the majority of its loans were in Kansas (12.5%), Mississippi (11.4%) and Florida (9.7%). Modex data shows Iowa accounts for 3.4% of the total.
In practice, direct endorsement agencies allow lenders to underwrite single-family mortgages and submit them to the Federal Housing Administration (FHA) for insurance endorsement. HUD said Open Mortgage was terminated because of the “poor performance” of the loans.
HUD’s decision on open mortgage lending will be in Federal Register Wednesday. The effective end date is May 20. Inside Mortgage Finance first reported on this topic.
Under its current rules, HUD can terminate direct endorsement approval for lenders whose default and claim rates in the past 24 months exceed 200 percent of the HUD field office’s geographic area serviced or the national insured mortgage default and claim rates .
After a decision is made, FHA loans that have been underwritten and approved by a direct endorsement underwriter, as well as cases with a firm commitment from HUD, may be submitted for insurance endorsement. Early-stage cases may be transferred to other lenders with Federal Housing Administration (FHA) approval.
As of Tuesday, Open Mortgage had 67 secured loan officers and 23 active branches. National Multi-State Licensing System (NMLS).
In November 2023, the company closed its reverse mortgage origination division because declining origination volume, combined with low pull rates, made it cost-prohibitive to close reverse mortgage loans. Open Mortgage continues to operate in the forward lending space.
