|HUD No. 00-313|
|Further Information:||For Release|
|In the Washington, DC area: 202/708-0685||Friday|
|Or contact your local HUD office||October 27, 2000|
CUOMO ANNOUNCES MAJOR UPGRADE TO NEIGHBORHOOD WATCH
EARLY WARNING SYSTEM
WASHINGTON -- Housing and Urban Development Secretary Andrew Cuomo today announced that HUDís Neighborhood Watch/Early Warning system has been upgraded to include the availability of lender branch level summary data and case level detail.
The Neighborhood Watch Early Warning system is a web-based software application that helps HUD staff and lenders identify originating and sponsoring lenders, loan characteristics and geographic areas that have a high incidence of single family insured mortgages going into default (90 days or more delinquent) and claim within the first two years of origination.
"This is another step forward in HUD's sweeping management reforms to identify and eliminate waste, fraud and abuse in our programs. We are moving aggressively to improve our performance," Cuomo said.
This system was initially developed to aid HUD staff in evaluating its programs and in monitoring the origination performance of lenders (at the institution level) approved to originate loans that are insured by the Federal Housing Administration (FHA), which is part of HUD. The system was made available to lenders in March 1999 via the FHA Connection, so that lenders can police themselves and each other. Usage continues to grow each day, with as many as 500 lenders accessing the system daily.
Edward Muckerman of Residential Funding Corp. said of Neighborhood Watch, "I must commend you on a fabulous system. This is the best risk management tool available to lenders nationwide."
The Department has been steadily improving Neighborhood Watch in stages. Branch level summary data and case level details are the latest features to come online.
The availability of branch level originations summary data will allow HUD staff and lenders to evaluate the performance of lenderís branch offices in addition to viewing performance at the institution level. Specifically, lenders will be able to more accurately evaluate their performance relative to HUDís Credit Watch/Termination initiative.
The Credit Watch/Termination initiative focuses on lenders with above-average number of defaults and foreclosures involving mortgages insured by the FHA. The goal of Credit Watch is to protect consumers from borrowing more than they can afford to repay, reducing defaults and foreclosures. Credit Watch does this by more closely monitoring lender performance and cracking down on offenders. Irresponsible lenders can be placed on probation or terminated from participation in the FHA insurance program.
Case level detail is also available for all FHA insured loans for the current 24 months of originations data being displayed in the system. Previously, system users could only view case level detail on defaulted loans. This feature will help lenders reconcile their FHA insured originations portfolio to HUDís.