A wholesale lender based in Virginia has settled allegations that it ignored bad credit, excessive debt-to-income ratios and improper broker fees on loans insured by the Federal Housing Administration. The agreement will cost the company more than $200,000.
The settlement between FHA’s Mortgagee Review Board and First Guaranty Mortgage Corp. was announced Tuesday by the Department of Housing and Urban Development.
First Guaranty, a 23-year-old firm that offers wholesale lending services, touts FHA, VA and USDA programs among its offerings.
“First Guaranty Mortgage Corp. ignored blemished credit and payment histories, approved loans with debt-to-income ratios that exceeded HUD’s benchmarks, and permitted borrowers to be charged improper mortgage broker fees,” HUD stated.
According to HUD, the McLean, Va.-based mortgagee agreed to pay a $127,500 civil money penalty. In addition, First Guaranty agreed to reimburse FHA more than $102,000 for past insurance claims and borrower-paid broker fees on loans that have been through the foreclosure process.
The settlement also calls for the lender to reimburse four borrowers $7,900 for improper broker fees.
In addition, First Guaranty agreed to reimburse HUD on another 18 loans if they default within five years of the settlement.
