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The Federal Housing Administration (FHA) on Monday suspended its approval from Baltimore-based Equitable Trust Mortgage Corp. (ETM). The 6-month suspension prevents ETM from originating and underwriting new FHA-insured mortgages. FHA alleges ETM improperly overcharged 37 borrowers for broker and loan origination fees in excess of that allowed under US Department of Housing and Urban Development (HUD) limits. FHA said in an e-mailed statement ETM charged both a broker fee and an additional 1% of the mortgage amount in origination fees, exceeding the 1% limit set by HUD. FHA claims ETM charged these unauthorized fees to a "substantially greater" portion of minority borrowers -- 68% -- than non-minorities. "It is critical that FHA lenders apply our standards and do not overcharge borrowers," said FHA commissioner David Stevens. "The fact that a disproportionate number of these borrowers were minority families is also troubling." HUD's Mortgagee Review Board found 21 alleged cases where ETM failed to disclose all origination fees as well as yield spread premiums to mortgage brokers on borrowers' Good Faith Estimates. FHA claims ETM's mortgages bear default rates in excess of the national average. FHA said HUD's Inspector General is investigating lending practices at ETM, which can appeal its suspension via written request within 30 days. An ETM spokesperson did not return calls for comment before this story was published. Write to Diana Golobay.

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