Equity Prime Mortgage (EPM) has had its direct endorsement approval for Federal Housing Administration (FHA) loans revoked in four jurisdictions overseen by the Department of Housing and Urban Development (HUD), according to a notice posted in the Federal Register on Thursday.

The impacted jurisdictions are New York; Jacksonville, Fla.; Orlando, Fla.; and Louisville, Ky. The effective date of the HUD notice is Aug. 22, meaning loans approved in those areas before that date are still eligible for FHA endorsement.

The FHA’s direct endorsement (DE) program allows companies to speed up the lending process by independently underwriting single-family mortgages without prior FHA review or approval. After closing, the approved DE lender then submits the loan to the FHA for insurance endorsement.

HousingWire first reported the news of the HUD action on Thursday. EPM took issue with the news outlet’s coverage, issuing a press release Friday that pushed back on what the company felt was misleading reporting. Specifically, EPM believed the article’s headline — “HUD terminates Equity Prime Mortgage’s FHA lending approvals” — implied a sweeping termination of EPM’s FHA approvals nationwide, rather than being limited to a few jurisdictions.

The HousingWire article went on to specify that the HUD notice impacted just four geographic areas. It also stated that a spokesperson for EPM declined to comment prior to the story’s publication.

EPM is a first-generation Latino-owned mortgage lender based in Atlanta. More than 90% of its borrowers are Hispanic, Black, women, first-time buyers, veterans or rural families, according to the company.

The press release seeks to clarify the circumstances surrounding the HUD notice, stating that “EPM continues to originate FHA loans across the country and remains a proud FHA-approved lender.”

The HUD notice states that DE approval “may be terminated on the basis of poor performance of FHA-insured mortgage loans underwritten by the mortgagee,” specifically any mortgagee “having a default and claim rate for loans endorsed within the preceding 24 months that exceeds 200% of the default and claim rate within the geographic area served by a HUD field office, and that exceeds the national default and claim rate for insured mortgages.”

In the press release, EPM stated that “it is important to recognize that delinquency ratios are indicators, not outcomes,” and “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.”

The company continued: “The reality is that skyrocketing property taxes, insurance premiums rising 200 to 400 percent, and the broader pressures of inflation across the country have placed stress on households that were otherwise well-qualified at origination.”

EPM President Philip Mancuso stated, “We respect the role of accountability, but we also know numbers alone can’t tell the story.” He added that “statistics don’t capture the resilience of families fighting to stay in their homes. That is what matters, and that is what we stand behind.”

Eddy Perez Jr., the company’s CEO, also weighed in, asking, “How do we say no to the people who need help the most? That isn’t the American way.” He continued: “We call it ‘The American Gift,’ the chance to own a home, to build wealth, to create stability. Without that chance, freedom itself is compromised.”

The company noted in the press release that it has taken “decisive steps to ensure that this situation will not happen again.” Those measures include transitioning to new servicing partners; implementing updated overlays and guideline adjustments around gift funds and debt-to-income ratios; retiring the company’s first downpayment assistance program and building a new one to ensure adjustments; and terminating broker relationships that did not align with the company’s credit standards.

Additionally, EPM noted it has appointed Frank Razi, a former HUD executive, as the company’s chief credit officer. In that role, Razi will oversee credit policy and portfolio performance.