Hud Suspends Fha Loan Approval For Equity Prime Mortgage, Rac In Several Markets

The U.S. Department of Housing and Urban Development (HUD) has “revoked” the Federal Housing Administration (FHA) loan approval authority of Equity Prime Mortgage (EPM) and Residential Acceptance Corporation (RAC), in several markets, as outlined in Wednesday’s Federal Register.

The action is part of HUD’s Credit Watch Termination Initiative, which monitors mortgage lenders’ performance.

In the notice, HUD said Equity Prime is losing its ability to independently approve FHA loans in HUD office jurisdictions Atlanta, Columbia, S.C., Dallas and Houston, while RAC, a Florida-based lender, is losing the ability to do so in Tampa.

The “terminations,” which Equity Prime’s CEO Eddy Perez says are actually a suspension, were effective Dec. 24, 2025, according to the Register. Perez told HousingWire that he was notified the day prior. RAC did not respond to HousingWire’s request for comment.

Perez said that the suspensions stem from elevated defaults tied to loans originated during a period of rapid market change, including rising inflation, higher property taxes and insurance costs, and increased stress on first-time homebuyers.

The company may seek reinstatement of its direct endorsement (DE) authority after six months by submitting an independent review of its loan performance along with a corrective action plan.

Direct endorsement authority allows lenders to underwrite single-family mortgages and submit them to the FHA for insurance. HUD may revoke that authority if a lender’s default and claim rates in a market exceed 200% of the regional average and surpass the national average.

Equity Prime previously lost its FHA loan approval authority in New York, Jacksonville, Orlando and Louisville in September 2025. Perez confirmed that each of those areas is showing improvement, and the company is working to reinstate the DE approvals as soon as the six-month period is up.

Perez also noted that Equity Prime has paid hundreds of millions of dollars into the FHA’s Mutual Mortgage Insurance Fund and said claims tied to the affected loans resulted in no net cost to the fund.

Perez added that industrywide, more lenders should expect similar regulatory actions as higher interest rates and inflation contribute to rising defaults, particularly in Southern and high-growth housing markets.

“I don’t think this is isolated,” Perez said. “I think more of these letters are 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 navigates what he described as an “identity crisis” after years of refinancing booms that masked underlying credit risk.

“We’ll take responsibility, clean it up further and keep moving forward,” he said.