Lend America Out of Business
[Update 3: adds Lend America's statement on ceasing operations, updates headline.]
The Federal Housing Administration (FHA) on Monday withdrew its approval from Ideal Mortgage Bankers, which operates as Lend America and Lending Key.
FHA is joined in the effort by Ginnie Mae, which at the same time defaulted Lend America, preventing it from issuing Ginnie mortgage-backed securities (MBS) that bear the full faith and credit of the US government.
The FHA's action prevents Lend America and Ideal from originating and underwriting FHA-insured mortgages or participating in FHA's single-family insurance program. FHA also charged $512,500 in civil money penalties in the wake of a civil lawsuit that HousingWire previously reported reveals a pattern of mortgage fraud spanning more than 20 years across a number of mortgage firms.
"We have no tolerance for lenders who abuse their FHA-approval," said FHA commissioner David Stevens. "The evidence in this case points to a disturbing pattern of senior officials and underwriters, either not knowing what they were doing, or not caring. Therefore, Ideal has been immediately withdrawn from participating in the FHA-insured mortgage program."
Ginnie's executive vice president Mary Kinney added: "FHA's action triggers an immediate default in the Ginnie Mae program. We have taken these steps to protect the integrity of our MBS program and the American taxpayer."
FHA's suspension of Lend America's approval follows an order by a federal judge to deny a Justice Department request to issue a temporary restraining order against Ideal. The judge’s denial came after the Justice Department, on behalf of HUD, filed a civil suit against Ideal, alleging Ideal improperly certified borrowers for more than $14m in FHA-insured mortgages.
The US Department of Housing and Urban Development (HUD) said Monday the US Attorney's Office for the Eastern District of New York is pursuing a civil fraud injunction against Ideal and one of its senior managers.
Ideal may challenge the withdrawal action and the civil money penalties within 30 days of the action.
Lend America said in an e-mailed statement the company "is surprised and disappointed" by the suspension of FHA's approval.
Lend America on Tuesday posted a statement on its Web site that the company ceased loan origination and operations. Lend America said it will continue obligations to past and current borrowers, Fannie Mae ($0.00 0%), Ginnie and the regulatory agencies.
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