Equity Prime Mortgage is defending its lending practices after a federal regulator terminated some of its regional approvals following a data analysis review.
The
"These numbers do not represent losses to the FHA insurance fund or to EPM, and they should not overshadow the fact that families are making payments and building stability," said Perez. "The reality is that skyrocketing property taxes, insurance premiums rising 200-to-400%, and the broader pressures of inflation across the country have placed stress on households that were otherwise well-qualified at origination."
The executive's comments refer to affordability factors impacting borrowers nationwide, including
EPM, founded in 2008, has grown in recent years and generated over $3 billion in origination volume last year, according to Home Mortgage Disclosure Act data.
Why HUD affected Equity Prime Mortgage
The regulator explained its action in
The jurisdictions where EPM is now barred, effective Aug. 22, are HUD offices in:
- New York
- Jacksonville, Florida
- Orlando, Florida
- Louisville, Kentucky
- Atlanta Homeownership Center
- Philadelphia Homeownership Center
FHA loans closed or approved before the termination became effective can still be submitted for FHA endorsement, while those in earlier processing stages can only be submitted if transferred to another local, approved lender.
EPM can still service the loans, and must still pay all FHA obligations. The move was announced via the government's FHA Credit Watch Termination Initiative, and signed by Vance T. Morris, the associate general deputy assistant secretary for housing at HUD.
EPM responds to HUD's actions
The lender can apply for reinstatement of direct endorsement approval in six months with an application that includes an independent analysis of its mortgage production and operations, HUD noted.
Perez, who said the company has taken numerous steps to address the situation, said the HUD ratios were used as "blunt instruments that paint a distorted picture of performance."
"The result is that lenders who serve the communities most affected by these pressures like first-time buyers, minorities, women, veterans, and rural families are penalized simply for doing the work of expanding access to homeownership," he said.
EPM's actions included transitioning to new servicing partners, updating guidelines around gift funds and debt-to-income ratios, and building a new downpayment assistance program to ensure adjustments. The wholesale lender also said it terminated broker relationships "that did not align with its credit standards."
The company also said it appointed Chief Credit Officer Frank Razi, a former director of processing and underwriting for the FHA, to oversee credit policy and portfolio performance moving forward.
More than 90% of EPM's borrowers are Hispanic, black, women, first-time buyers, veterans or rural families, and the lender suggested HUD's enforcement of rigid formulas without context limited their housing access.
Representatives for HUD didn't return a request for comment Friday.
"How do we say no to the people who need help the most?" Perez said. "That isn't the American way."
