Under the certified agency program, inaugurated on an experimental basis in the fall of 1957 and now extended to most parts of the country, processing functions-usually performed by the FHA Office preparatory to FHA insurance endorsement-are accomplished by approved mortgagees who are qualified and designated as authorized agents of the Federal Housing Administration. The authorized agents are thus empowered to make mortgage insurance commitments which are binding. CAP gives recognition to the fact that approved mortgagees are experienced home mortgage lenders and are capable of making the required credit evaluations and other risk analyses embodied in CAP. The program is applicable to singlefamily dwellings, both existing and proposed, insured under sections 203 (b) and (i) of the National Housing Act. The local authorized agents under CAP perform or supervise all steps required to complete FHA-insured loan transactions. After issuing commitments (either conditional or firm), the agent submits the necessary documents to the FHA for insurance endorsement and postreview. This postreview of cases provides the FHA insuring offices with the means of exercising close supervision of the authorized agents to maintain compliance with FHA requirements. To further facilitate the processing of cases locally, the agent utilizes the services of FHA-approved local fee appraisers and fee inspectors. Special FHA training and indoctrination is required for all CAP fee personnel. All fee service reports must be made on FHA forms following approved procedure. A special detailed operating instruction manual has been prepared which is entitled "CAP Operating Instructions for Authorized Agents." This contains full instructions and guidance on procedure, forms, etc., for all CAP participants. A CAP appraiser must have special qualifications which are not usually required for regular FHA fee appraisers. In addition to the usual appraisal, the CAP appraiser is presently required to be intimately familiar with FHA minimum property standards (MPS) in order to determine any noncompliance and to stipulate plan corrections to be made as a condition of his appraisal. The CAP fee inspector must be thoroughly experienced in home construction methods and materials. He must also know the applicable FHA minimum property standards. It is his responsibility to determine MPS compliance during construction. B. PROGRAM DEVELOPMENT In October 1957 CAP was initiated in towns of less than 15,000 population (1950 census) under the jurisdiction of the insuring offices in Albany, N.Y., Philadelphia, Pa., Greensboro, N.C., Topeka, Kans., Springfield, Ill., Phoenix, Ariz., and that part of the Grand Rapids, Mich., office jurisdiction known as the Upper Peninsula. Although CAP involved some changes in the regular type FHA processing, industry support and borrower response was good. It took approximately 3 months to put the program into effective operation. During this period, various problems arose and steps were taken to make the necessary adjustments. In March 1958 it was decided to test the workability of CAP in a representative group of large cities and at the same time include other areas in the basic program. For these purposes, the following offices were brought under CAP to the extent indicated: Philadelphia, Pa.: All towns except Metropolitan Philadelphia. Grand Rapids, Mich.: Towns of 15,000 and less. Chicago, Ill.: Towns of 15,000 and less. Denver, Colo.: All towns (proposed construction in metropolitan areas of Denver, Colorado Springs, and Pueblo was withdrawn from CAP in August 1959). Helena, Mont.: All towns. Bangor, Maine: Towns of 15,000 and less. Portland, Oreg.: All towns except Metropolitan Portland. On June 4, 1958, another extension of CAP to additional insuring office jurisdictions took place, this time on the basis that the program would be extended to all towns except those in which an insuring office, service office, or valuation station was located. The following additional offices were authorized to use CAP: Minneapolis, Minn. Richmond, Va. Memphis, Tenn. Des Moines, Iowa. Lubbock, Tex. (as of October 1, 1960, 21 of the 72 counties were excluded from CAP). Seattle, Wash. In certain cases, the local directors have been given leeway in the designation of eligible territory within their areas of jurisdiction. Consequently, some towns, such as El Paso, Tex., are eligible for existing construction only, solely to help speed processing. Restrictions on eligibility of existing construction have been imposed in other areas-Flagstaff, Ariz., because of special water and sewage problems in new developments, and the east coast of North Carolina, because of military areas, for example. Other areas have been kept out of CAP because of special situations such as the speculative nature of home construction around the Redstone Arsenal at Huntsville, Ala. On March 13, 1959, directors of insuring offices, where CAP was authorized, were permitted to install CAP in all towns with a popula-tion of approximately 20,000 or less, according to the 1950 census, except in areas effectively serviced directly by the field offices. Following further experience with CAP, on September 24, 1959, FHA further extended the CAP operations to 48 additional insuring offices. By this action, the entire country except New York City, Rhode Island, Alaska, Hawaii (which was shortly authorized to operate under CAP), and Puerto Rico was included in the certified. agency program for small communities and areas at some distance: from FHA field offices. C. OPERATIONS EXPERIENCE Since inauguration of the program, over 5,000 authorized agents have been appointed, including representation of all types of lending institutions, such as National, State, savings and industrial banks; Federal savings and loan companies; insurance companies; and mortgage bankers. Many mortgagees (certified agents) now experienced under CAP take great pride in exercising their responsibilities under the program and find it an attractive and profitable addition to their service for the community. A total of 2,348 appraisers and 1,319 inspectors have been designated. Through August 31, 1960, a total of 54,998 CAP commitments have been issued and 40,196 CAP mortgages have been insured. With respect to the insured mortgages, 7,775 involved new construction and 32,421 covered existing properties. Table No. 36 gives a sample monthly breakdown of CAP activity in each insuring office area for the month of August 1960. A study of CAP loan commitment volume percent of total section 203 commitments by months from January 1, 1960, through October 31, 1960, was made by the Division of Research and Statistics, table No. 37. This analysis shows CAP commitments ranging from 2.72 to 3.56 percent of the total section 203 commitments. During the first 6 months of 1960 the average was 2.85 percent. During the next 4 months the average was 3.12 percent (the high month was August 1960 with 3.56 percent). The foreclosure (default terminations) experience of CAP compares favorably with the regular section 203 foreclosure rate. However, the certified agency program has not had sufficient time to establish any firm record of credit experience. ་། |