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Firm Hit With Lawsuits, Penalties and FHA Termination

HUD terminates mortgagee approval for AmericaHomeKey

March 26, 2012

By MortgageDaily.com staff


Following a class action filed by former production workers, an overtime lawsuit filed by former originators and a civil money penalty in excess of $100,000 -- a Texas-based lender has now lost its approval to close Federal Housing Administration loans and been hit with an even bigger penalty.

A statement Monday from the Department of Housing and Urban Development indicated that AmericaHomeKey Inc.'s approval as an FHA mortgagee has been immediately and permanently withdrawn. As a result, the lender will no longer be able to originate or underwrite new FHA loans.

HUD's Mortgagee Review Board additionally imposed a $268,000 penalty against the company.

"Repeated and serious violations of FHA requirements" were cited for the decision.

According to the announcement, the Dallas-based company charged fees that weren't allowed.

AmericaHomeKey failed to adequately document the source of borrower funds used for closing.

HUD said that ineligible borrowers were approved for FHA loans. Income stability wasn't verified, while income was undocumented and incorrectly calculated.

Properties were financed that didn't meet FHA requirements. In one case cited by HUD, FHA flipping requirements were disregarded and a property purchased for just $14,100 was resold three months later for $125,000.

AmericaHomeKey was additionally terminated by Ginnie Mae.

The actions follow a $138,900 civil money penalty announced by HUD last month over allegations that the company failed to remit up-front mortgage insurance premiums on time for FHA loans.

Former employees of AmericaHomeKey -- including closers, funders and underwriters -- filed a putative class action against the firm on Feb. 17 in U.S. District Court for the Northern District of Georgia claiming that the company failed to pay them overtime earned before it reclassified their positions as non-exempt in February 2011.

The company reportedly faced a similar lawsuit filed by loan originators who claim they were misclassified as exempt employees who worked overtime without pay.

AmericaHomeKey disclosed in 2009 that it eliminated wholesale lending out of its Kirkland, Wash., facility.

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