Government auditors have discovered that the four Federal Housing Administration regional offices rarely use their authority to suspend bad lenders, but that may be changing very soon, according to FHA Commissioner John Weicher.Auditors from the Government Accountability Office (formerly the General Accounting Office) found that only one homeownership center used its suspension to temporarily stop seven direct-endorsement lenders from making FHA loans during fiscal year 2003 and the first half of fiscal 2004. The FHA should "develop and implement guidance specifying the conditions under which a homeownership center must suspend a lender's direct endorsement authority," according to the GAO report. Mr. Weicher told the GAO in an October letter that the FHA is developing consistent standards for suspensions, and implementation "will occur by January 2005."

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