HUD Suspends Gateway Branch Office

The Department of Housing and Urban Development has suspended a branch office of Gateway Funding Diversified Mortgage Services, whose founder and chief executive is a vice chairwoman of the Mortgage Bankers Association.HUD suspended the branch office, which is located in Gateway's home office in Horsham, Pa., for having a high default rate on Federal Housing Administration single-family loans that is twice the national average. Gateway president and CEO Regina Lowrie explained that the number of defaulted loans has remained constant over the past two years, but the company's origination of FHA loans has dropped by nearly 50% since 2001. With a number of FHA loans declining, the percentage of defaulted loans increased to over 4% and HUD suspended the branch office from making FHA loans for six months under its Credit Watch program. "Unfortunately it is strictly a numbers game," Ms. Lowrie said in an interview. "I have not seen a decrease in the quality of our book of business," she added. HUD published its latest list of Credit Watch suspensions in the Aug. 20 Federal Register, which included Gateway and 21 other lenders.