FHA withdraws approval of Cambridge Home Capital
The Federal Housing Administration withdrew its approval of Cambridge Home Capital because of "numerous and egregious violations of FHA requirements." The Department of Housing and Urban Development, its inspector general and the U.S. Attorney's Office in the Southern District of New York, investigated CHC's practices and found many areas of FHA noncompliance, according to HUD. Results of the investigation said CHC failed to maintain and implement a required quality-control plan; failed to document the stability and/or source of borrowers’ income, approving loans with grossly excessive debt-to-income ratios without compensating factors to justify approval; and used conflicting information in originating and obtaining FHA mortgage insurance. "The serious and egregious violations we discovered require strong action in order to protect the best interests of FHA and the public," said FHA Commissioner David Stevens. "FHA’s underwriting standards are there for a reason – to ensure sustainable homeownership for borrowers and to protect the financial health of the insurance fund so we can continue to meet our public mission." Cambridge Home Capital is permanently suspended from originating FHA-insured loans, and the government body is seeking a $182,000 monetary penalty. CHC has 29 days to appeal the FHA's decision by submitting a written request for a hearing before a judge. Cambridge Home Capital was not immediately available for comment. In July, the FHA withdrew its approval of more than 900 lenders due to noncompliance. Write to Christine Ricciardi.