The U.S. Department of Housing and Urban Development (HUD) has the Federal Housing Administration (FHA) loan approval authority of Equity Prime Mortgage (EPM) and Home acceptance company (RAC), in several markets, as detailed in Wednesday’s Federal Register.
The action is part of HUD’s Credit Watch Termination Initiative, which monitors the performance of mortgage lenders.
In the communicationHUD said Equity Prime is losing its ability to independently approve FHA loans in the HUD office jurisdictions of Atlanta, Columbia, SC, Dallas and Houston, while RAC, a Florida-based lender, is losing the ability to do so in Tampa.
The “terminations,” which Equity Prime CEO Eddy Perez says are actually a suspension, took effect on December 24, 2025, according to the Register. Perez said HousingWire that he had been informed the day before. RAC did not respond to HousingWire’s request for comment.
Perez said the suspensions stem from higher loan defaults that originated during a period of rapid market change, including rising inflation, higher property taxes and insurance costs, and increased pressure on first-time homebuyers.
The company may seek to reinstate its direct approval (DE) authority after six months by submitting an independent review of credit performance along with a corrective action plan.
Equity Prime previously lost approval authority for FHA loans in New York, Jacksonville, Orlando and Louisville in September 2025. Perez confirmed that each of these areas is showing improvement, and the company is working to reinstate DE approvals once the six-month period is over.
Perez also noted that Equity Prime has deposited hundreds of millions of dollars into the FHA’s Mutual Mortgage Insurance Fund and that claims associated with the affected loans incurred no net costs to the fund.
Perez added that more lenders across the industry should expect similar regulatory action as higher interest rates and inflation contribute to rising defaults, especially in the southern and fast-growing housing markets.
“I don’t think this is an isolated incident,” Perez said. “I think there are more of these letters going out, and I don’t see an end in sight.”
Perez said Equity Prime remains committed to serving first-time homebuyers even as the broader mortgage industry faces what he described as an “identity crisis” after years of a refinancing boom that masked underlying credit risk.
“We will take responsibility, clean it up further and continue to make progress,” he said.
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