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Sweeping Actions Against Hundreds of FHA Lenders

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The U.S. Department of Housing and Urban Development took action against more than 200 mortgagees. Among the actions were FHA suspensions, settlements and civil money penalties. Most of the impacted lenders failed to meet annual re-certification requirements.

Americare Investment Group Inc. agreed to a $124,000 settlement with HUD on Oct. 8, 2009, according to a public filing today by HUD. The company, which didn’t admit fault or liability, will be required to provide to HUD with post-closing reviews on all construction-to-permanent during a six-month probationary period.

HUD claims that Arlington, Texas-based Americare — which also does business as Premiere Capital Lending — failed to include required loan documentation and information. It also allegedly failed to ensure the maximum loan amount was properly calculated so that mortgages weren’t over-insured.

Americare was among 15 firms HUD recently said it was investigating. Subpoenas were issued against all 15 mortgagees.

A settlement with Community Home Lending Inc. in Birmingham, Ala., on July 1, 2009, includes an $11,500 civil money penalty. Though Community didn’t admit wrongdoing, HUD claims the mortgagee allowed non-employees to originate FHA-insured loans while working in property-management or real-estate jobs. It also allegedly failed to maintain adequate quality controls.

In October 2008, HUD disclosed that it terminated a Birmingham branch of Community under the Credit Watch Termination Initiative.

Chadds Ford, Pa.-based Eagle Nationwide Mortgage Co. agreed to a July 29, 2009, settlement that includes a $3,500 civil money penalty. Direct mail solicitations sent by Eagle, which didn’t admit fault or liability, implied FHA endorsed its programs and that FHA personnel were employed by Eagle, the notice said.

HUD said it entered an administrative agreement with Madison Home Equities in Carle Place, N.Y., that included the loss of its FHA approval, a $90,000 civil money penalty and the posting of $600,000 to guaranty its indemnification of HUD on 12 loans. Madison’s president, Nadine Malone, is required to notify HUD when she begins or ends employment with any entity associated with government mortgage production.

In April, a federal judge approved a consent decree and judgment against Madison resolving an October 2008 civil lawsuit accusing the company of trying to defraud HUD. The company allegedly certified that borrowers on $4 million in FHA-insured loans were qualified for the government-insured program — even though they were not.

Mortgage America Bankers LLC agreed to a $10,000 settlement with HUD on Sept. 19, 2009. HUD claims that the Kensington, Md.-based company was deficient in its quality control.

Reverse mortgage lender World Alliance Financial Corp., which stopped accepting new business in July 2009, agreed to an April 3, 2009, settlement with HUD for $13,000 over quality control deficiencies. World Alliance ranked as the No. 3 retail reverse mortgage lender during the second-quarter 2009.

HUD said it immediately withdrew the FHA approval of 67 mortgagees for one year because they were not in compliance with annual re-certification requirements.

Another 41 firms faced a $3,500 civil money settlement over allegations that they failed to meet annual re-certification requirements.

In addition, 104 mortgagees failed to meet annual re-certification requirements but subsequently cured the violations. Each of the firms, without admitting guilt, agreed to a $1,000 administrative fee and to cure the violations within 30 days.

The following mortgagees were suspended by HUD over various allegations.

Mortgagee Location Date Suspended Alleged Activities
Ascella Mortgage LLC Manchester, Conn. Aug. 4, 2009 Failed to notify HUD about surrendered origination license.
Beneficial Mortgage Corp. San Juan, P.R. June 3, 2009 Failed to notify HUD that it was subject of investigation by the Puerto Rico Financial Institutions Commissioner’s Office over its mortgage servicing practices. Suspended pending outcome of HUD review or legal proceedings.
Liberty Trust Mortgage Corp. Towson, Md. Aug. 4, 2009 Failed to notify HUD of the closure of its only office.
Mortgage Depot Inc. Las Vegas Aug. 4, 2009 Failed to notify HUD of its receipt of a sanction notice by the State of Nevada, Division of Mortgage Lending, which proposed a fine and revocation of its mortgage broker license.
Transland Financial Services Inc. Maitland, Fla. Sep. 25, 2009 Failed to honor terms of a HUD indemnification agreements from February 2003 and February 2005. Owes HUD $278,901 but has failed to respond to HUD inquiry about debt.
Universal Bancorp Ltd. Downers Grove, Ill. not listed Failed to notify HUD that it had closed its only FHA approved branch office.

Suspensions that were already announced on June 10, 2009, and listed in today’s notice included San Juan, P.R.-based Beneficial Mortgage Corp.; Golden First Mortgage Corp. in Great Neck, N.Y.; and Coral Gables, Fla.-based Great Country Mortgage Bankers Inc.

Also included in today’s notice was the Aug. 4, 2010, suspension of Taylor Bean and Whitaker Mortgage Corp. in Ocala, Fla.

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