The Federal Housing Administration has yanked the mortgagee approval from a lender based in the State of New York over “numerous and egregious violations of FHA requirements.”
Two months ago, the Department of Housing and Urban Development reported that Cambridge Home Capital LLC was among six mortgagees to lose their direct endorsement approval. The group had default and claim rates that were more than 300 percent of the field office rates.
On Monday, HUD said that the Federal Housing Administration’s Mortgagee Review Board has permanently withdrawn Cambridge’s FHA approval. HUD plans on filing a civil complaint against the Great Neck, N.Y.-based lender, which faces a possible $182,000 penalty.
In addition, civil fraud charges were filed against the company by the U.S. Attorney’s Office for the Southern District of New York.
“The Mortgagee Review Board took these actions based upon Cambridge Home Capital’s numerous and egregious violations of FHA requirements, including: failure to maintain and implement a required quality-control plan; failure 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 using conflicting information in originating and obtaining FHA mortgage insurance,” HUD stated.
The housing agency said that an acceptable QC plan requires trained staff and prohibits minimum loan amounts.
A sample of 13 loans reportedly found that Cambridge approved the mortgages without adequate significant compensating factors or documentation.
Information used in originating loans conflicted with information submitted for mortgage insurance on four sample loans, according to HUD. Document discrepancies involved employment, credit scores and property addresses.
The former mortgagee has 30 days to request a hearing before an administrative law judge.
