How will a Mortgagee be notified of a proposed Credit Watch termination?

FHA will issue a Proposed Credit Watch Termination Notice to the Mortgagee prior to terminating their approval. The Mortgagee may appeal the proposed termination by submitting a written request for an informal conference with the Deputy Assistant Secretary (DAS) for Single Family Housing or his or her designee within 30 Days of receipt of the Notice.  If a Mortgagee does not request an informal conference within 30 Days of receiving the Notice, the Mortgagee has waived its appeal and its authority will be terminated 60 Days from the date of the Proposed Credit Watch Termination Notice without further notice from HUD. 

As part of the informal conference, the Mortgagee or its representative may make an oral and/or written presentation to oppose the proposed termination. FHA will only consider presentations that specifically address relevant mitigating factors and present facts and circumstances to explain the Mortgagee’s poor performance. 

After the informal conference, FHA will make a determination whether to sustain or withdraw the proposed termination. FHA will notify the Mortgagee of its decision in writing via a Final Notice of Determination. If sustained, the termination will not take effect until the Mortgagee receives the Final Notice. 

A Mortgagee whose authority has been terminated under Credit Watch is prohibited from originating or underwriting FHA-insured Single Family Mortgages within the area of the HUD field office(s) listed in the Notice. The Mortgagee’s general FHA approval and supplemental authorities remain unaffected. 

For additional information see Handbook 4000.1 V.E.3.a.iii. at https://www.hud.gov/program_offices/administration/hudclips/handbooks/hsgh

All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.


Topic Number: KA-03478