HUD Cuts Off Lenders With Too Many Bad FHA Loans
Published Date: 7/10/2026
Notice
Summary
HUD is ending the special approval for some mortgage lenders who didn’t do a good job with FHA-backed loans. If a lender’s loan problems are way above the limit, HUD pulls their Direct Endorsement (DE) approval, meaning they can’t approve FHA loans anymore. This change affects certain lenders now and helps protect borrowers and taxpayers from risky loans.
Analyzed Economic Effects
5 provisions identified: 1 benefits, 3 costs, 1 mixed.
When HUD Can Pull DE Approval
HUD can terminate a lender's Direct Endorsement (DE) approval if the lender's default and claim rate for loans endorsed in the preceding 24 months is more than 200 percent of the rate in the HUD field office's geographic area and also exceeds the national default and claim rate for insured mortgages.
Named Lenders Had DE Terminated
HUD published a list of mortgagees whose DE Approval has been terminated: Equity Prime Mortgage LLC (effective 2026-06-04), AmeriTrust Mortgage Corp. (effective 2026-06-02), and OCMBC Inc. (effective 2026-05-01). The notice lists the HUD field office jurisdictions and Homeownership Center(s) for each termination.
Path And Requirements For Reinstatement
A terminated mortgagee may apply for reinstatement only after the DE Approval has been terminated for at least six months. The application must show the mortgagee still meets HUD mortgagee requirements (24 CFR 202.5, 202.6, 202.7, 202.10, 202.12), include an independent CPA analysis of the terminated office's operations and cited FHA loans, and a written corrective action plan with evidence of implementation; applications must be submitted through the Lender Electronic Assessment Portal (LEAP).
Loss of Underwriting Ability
If HUD terminates a mortgagee's DE Approval, that mortgagee is barred from underwriting FHA-insured single-family mortgages within the HUD field office jurisdiction(s) listed in the notice, effective on the dates shown. Loans closed or approved before the termination may still be submitted for FHA insurance endorsement.
Servicing Rights Still Allowed
Mortgagees that are authorized to hold or service FHA-insured mortgages may continue to hold or service those mortgages even after their DE Approval is terminated.
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Key Dates
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