The Federal Housing Administration Mortgagee Review Board
(MRB) permanently withdrew FHA approval for four mortgage lenders and suspended a fifth. Further, the MRB placed two more on a six-month probation period.
The lenders losing approval are: Strategic Mortgage Corporation
, Americare Investment Group
, which does business as Premier Capital Lending
and TopDot Mortgage
. The MRB suspended FHA approval on Home Mortgage Inc.
(HMI) for six months. In addition to losing its FHA approval, TopDot faces action from the Government National Mortgage Association
, or Ginnie Mae.
According to the FHA announcement, Strategic allegedly failed to comply with federally-mandated requirements on mortgages backed by the government. The originator allegedly charged borrowers excessive fees, and failed to disclose all fees on the Good Faith Estimates (GFE). The MRB will also seek $71,000 from Strategic in penalties.
ProMortgage lost its FHA approval for allegedly failing to adopt and maintain a quality control plan or perform quality control reviews of loans that slipped into default within six months after closing. Among other allegations, the MRB charges ProMortgage for allegedly allowing borrowers to provide verification of employment directly to the lender instead of the employer sending the documentation. That requirement is in place to avoid possible manipulation or falsification of the documents. The MRB will seek $124,000 in penalties from ProMortgage.
Americare’s violations stem from a settlement in Oct. 8, 2009, when the company agreed to pay $124,000 and enter probation for six months. The MRB revoked its FHA approval for allegedly failing to make a single monthly payment on that agreement.
In June 2009, the US District Court for the Northern District of Illinois
indicted the CEO of HMI for allegedly profiting on 450 fictitious mortgage loans. HMI allegedly failed to notify FHA of the indictment as required.
TopDot Mortgage also lost its FHA approval for a number of allegations, which include failing to document the borrowers’ income, evaluating creditworthiness and approving loans with excessive debt-to-income ratios without justification. The MRB will also seek $674,000 in penalties.
Ginnie Mae will also terminate TopDot as an issuer in its mortgage-backed securities (MBS) program and will revoke its ability to continue servicing Ginnie Mae securities. LoanCare Servicing Center
received servicing rights on the TopDot $181.2m Ginnie portfolio.
"This lender demonstrated a pattern of utter disregard for how we do business and its behavior not only put the FHA insurance fund at risk, but placed their own customers at greater risk of foreclosure," said FHA commissioner David Stevens.
The MRB also placed two lenders on a six-month probation period. Action Mortgage Corporation
and Cooper and Shein
allegedly conducted misleading advertising practices. The MRB will seek $7,000 in penalties from Action Mortgage and $11,000 from Cooper and Shein, which did business as Great Oak Lending Partners
"FHA approval is a privilege that we entrust to the most responsible lenders. If any lender violates that trust, the MRB will take action to protect borrowers, the FHA insurance fund and FHA programs,” Stevens said.
The actions come after the US Department of Housing Development subpoenaed 15 mortgage companies
for high insurance claims.
The lenders in today's crack down can file for appeal within 30 days.
Write to Jon Prior