Ineligibility to Participate in Origination of FHA-Insured Loans.

The November 30, 2009, rule proposed to codify criteria specified in section 203 of the HFSH Act that precludes any lending entity not approved or authorized by the Secretary from participating in FHA programs, and also prohibits participation by an entity if the entity is currently: suspended, debarred, or under limited denial of participation;

Under indictment for, or has been convicted of, an offense that reflects adversely upon the applicant’s integrity, competence, or fitness to meet the responsibilities of anapproved mortgagee;

subject to unresolved findings of a HUD investigation, or engaged in business practices that do not conform to generally accepted practices of prudent mortgagees or that demonstrate irresponsibility; convicted of, or has pled guilty or nolo contendere to, a felony related to participation in the real estate or mortgage loan industry; in violation of the Secure and Fair

Enforcement (SAFE) Mortgage Licensing Act (Title V of Division A of Public Law 110-289, approved July 30, 2008) (SAFE Act); or in violation of any other requirement established by theSecretary.

Implementation of the criteria in section 203 of the HFSH Act did not require rulemaking, and the November 30, 2009, proposed rule noted that the statutory restrictions were in effect upon enactment of the HFSH Act.