Mortgage Daily Logo

Lend America Loses FHA Approval

FHA News

Lend America has lost its approval to make loans insured by the Federal Housing Administration.

In an announcement today, the U.S. Department of Housing and Urban Development said FHA approval was withdrawn for Ideal Mortgage Bankers, which does business as Lend America and Lending Key.

“The action is effective immediately and prevents Ideal from originating and underwriting new FHA-insured mortgages or from participating in the FHA single family insurance program,” the statement said.

HUD’s Mortgagee Review Board imposed a $512,500 civil money penalty against the Melville, N.Y.-based firm in connection with two notices of violation issued last month. The penalties were the result of “numerous violations of FHA origination and underwriting requirements, including failing to document borrowers’ income and creditworthiness, and for submitting false certifications to the department.”

FHA alleges that Lend America approved unqualified loans and failed to document source of funds. In addition, the company allegedly omitted liabilities from an underwriting analysis without supporting documentation, approved loans that exceeded HUD ratios without adequate compensating factors and exceeded HUD’s maximum in calculating insurable loan amounts.

The company is also accused of failing to follow HUD guidelines when processing an employee loan. It additionally closed a loan with an excessive mortgage broker fee and submitted false certifications tied to its yearly verification report.

Lend America has 30 days to challenge the withdrawal action and the civil money penalties before an administrative law judge, the statement said.

“The company is surprised and disappointed by today’s action by the U.S. Department of Housing and Urban Development’s Mortgagee Review Board,” Lend America said in a statement. “The company is currently reviewing all possible options and remedies in response to this action, and will respond shortly once a decision has been reached.”

The government originally sued Lend America in U.S. District Court in Central Islip, N.Y., during October. But the company announced one day later that “the court denied the government’s request for an order prohibiting Lend America from originating FHA insured loans.”

FHA’s action today triggered a default in the Government National Mortgage Association’s program, Ginnie Mae Executive Vice President Mary Kinney said in the announcement. Lend America can no longer issue Ginnie Mae securities.

“The evidence in this case points to a disturbing pattern of senior officials and underwriters, either not knowing what they were doing, or not caring,” FHA Commissioner David Stevens said in the statement.

HUD requested that the U.S. Attorney’s Office for the Eastern District of New York pursue a civil fraud injunction against Lend America and one of its senior managers.

That senior manager is likely Michael Ashley, Lend America’s executive vice president and chief business strategist. A complaint filed in October by the government alleged Ashley was the mastermind behind the scheme to defraud HUD. It also indicated that he previously admitted to mortgage fraud while operating his mortgage brokerage, Shares Capital, in 1989.

United States of America v. Ideal Mortgage Bankers, LTD et al.
2:09-cv-04484-JFB -WDW, Oct. 20, 2009 (U.S. District Court for the Eastern District of New York).

Related Posts

Best Mortgage Lenders By Category

Best Mortgage Lenders By Category

A report based on a recent survey of consumers who were shopping for a residential loan has identified the best home lenders in a variety of categories -- including government programs, jumbo loans and online services. The 10-question survey of prospective mortgage...

Best Mortgage Lenders By Category

FHA Endorsements Edge Higher, Book of Biz Grows

Monthly residential government-insured mortgage production was nudged up, though commercial real estate endorsements plunged. The book of business continued to grow. At the end of August, the Federal Housing Administration had insurance in force on 8,622,052...

Best Mortgage Lenders By Category

FHA Endorsements Inch Up, Might Rise More

Monthly Federal Housing Administration business inched higher and might accelerate further. Delinquency turned sharply higher, and reverse mortgage production was the slowest it's been in four years. But commercial mortgage endorsements doubled. As the first half of...

Best Mortgage Lenders By Category

SF Endorsements Up, Delinquency Down at FHA

Monthly new business was moderately higher in the Federal Housing Administration's residential business, while loan performance improved. But commercial mortgage endorsements plunged. Data reported by the Department of Housing and Urban Development indicate FHA...

Best Mortgage Lenders By Category

FHA False Claims Actions Among Industry Concerns

Among the concerns shared by attendees at a recent secondary marketing conference is the legal uncertainty accompanying government-insured originations. A majority want a company-wide production management dashboard. The Mortgage Bankers Association hosted its annual...

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI