FHA Penalizes Over 1,000 Lenders for Violating Regulatory Standards

by devteam July 28th, 2010 | Share

The Federal HousingrnAdministration's Mortgagee Review Board (MRB) has revealed a list of over onernthousand lenders against whom it has taken action over the last several months forrnviolations of the agency's program requirements. </p

Infractions ranged from failing to notify thernDepartment of Housing and Urban Development of changes in license status orrnoffice closures, improperly displaying FHA seals on company websites orrnadvertising materials, and using non-employees to process loans, to failing to properlyrnprocess or document credit, employment and appraisal information.   Thernactions taken by the Board included permanent withdrawal of FHA lendingrnauthority, suspensions, and fines ranging into the high six digits.  </p

“Lenders should knowrnby now that FHA will not tolerate fraudulent or predatory lendingrnpractices,” said FHA Commissioner David Stevens. “Any FHA-approvedrnlender that does business with us must follow our standards. If we determinernthat our partners are not playing by the rules, we will take action – it's thatrnsimple.”</p

Firms that were permanentlyrnbanned from participation in FHA Programs were:</p<ul class="unIndentedList"<liNorthrnShore Financial, Inc, East Meadow NY for permitting non-employees and/orrnmortgage brokers to participate in the loan process and other violations.</li<liFinancialrnMortgage USA, Inc.; also fined $97,500 for violations of requirements that ledrnto loan defaults.</li<liIdealrnMortgage Bankers Ltd./Lend America, Melville, NY.; also fined $512,500 forrnsubmitting false certifications, failing to adequately document the stabilityrnand/or source of income, and other violations.</li<liLibertyrnState Finance, Parsippany, NJ; knowingly employing two individuals who wererndebarred and/or had been convicted of an offense.</li<liNorthrnShore Financial, Inc., East Meadow, NY; permitting non-employees and mortgagernbrokers to participate in the loan process and other violations.</li<liStrategicrnMortgage Corp., Oklahoma City, OK was also fined $71,000 for hiring independentrncontractors and incorrectly reporting compensation to the IRA; improperly chargingrnborrowers a broker fee in addition to an origination fee, and violation ofrnRESPA requirements.</li<liUSArnHome Loans, Towson MD; failing to insure that minimum income, credit, andrnproperty condition requirements were met and failing to notify HUD that itsrnlicense had expired.</li<liU.S.rnMortgage Corp, Pine Brook, NJ; failing to maintain an acceptable warehouse linernof credit or other approved mortgage funding program.</li<liPremiumrnCapital Funding/TopDot Mortgage, Jericho, NY; also received a civil penalty ofrn$674,000 for violations of requirements that led to loan defaults.</li<liProMortgage,rnInc., Claremore, OK; also penalized $124,000 for violations of requirementsrnthat led to loan defaults.</li<liAmericarernInvestment Group/Premier Capital Lending, Arlington, TX; failing to comply withrnterms of an earlier settlement agreement.</li<liIkonrnMortgage Lenders, Ft Lauderdale, FL; Federal Guaranty Mortgage Company,rnPembroke Pines, FL; Automated Finance Corporation, Calabasas, CA; Premiere ServicernMortgage Corp., Westchester, OH.; Direct Lending, Inc., Livonia, MI; Jett Financial Services, Inc., San Diego, CA;rnclosing an office or losing license without notifying HUD</li</ul

Suspensions of six months to arnyear and/or civil money penalties were assessed against:</p<ul class="unIndentedList"<liMeridianrnLending, Monroe, GA – One year suspension.</li<liActionrnMortgage Corporation, Cranston, RI – 6 months suspension and $7,000</li<liAcademyrnMortgage Corp. Sandy, UT – $30,000</li<liAssuretyrnFinancial Services, Englewood, CO – $7,500</li<liCooperrnand Shein LLC/Great Oak Lending Partners, Timonium, MD – 6 month probation andrn$11,000.</li<liEquitablernTrust Mortgage Corp., Baltimore, MD – $277,500 civil penalty, refund $147,589rnin brokers fees to borrowers.</li<liFranklinrnFirst Financial, Melville, NY – Civil penalty of $413,500; indemnify HUD on 31rnloans, and reimburse fees to 78 borrowers.</li<liHomernMortgage, Inc., Burr Ridge, IL – suspended pending the outcome of a federalrnindictment.</li<liNationsrnDirect, LLC., Irvine, CA – $3,500</li<liParamountrnBond Mortgage Company, St, Louis, MO – $68,500 penalty; indemnify HUD on ninernloans.</li<liPrimewestrnMortgage Corp., Lubbock, TX – $168,500.</li<liSunrnWest Mortgage Company, Cerritos, CA – $10,000.</li<liVanDykrnMortgage Corp., Grand Rapids, MI – $7,500; indemnify HUD on two loans</li</ul

The MRB suspended 905 otherrncompanies for one year for failing to comply with the Department's annualrnrecertification requirements and assessed $3,500 fines against 147 lendersrnwhich had been out of compliance but had cured that situation.</p

All of the actions and thernreasons for them were published in The Federal Register dated July 26,rn2010.

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About the Author


Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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