Dozens of lenders on government-insured mortgages have faced a multitude of actions, including millions of dollars in penalties and other payments. Impacted lenders include Fairway Independent Mortgage Corp., Fifth Third Bank and U.S. Bank, N.A.
A public notice filed by the Department of Housing and Urban Development reflected 21 actions taken against mortgagees that didn’t comply with requirements on loans insured by the Federal Housing Administration.
Among the more notable actions was an Oct. 7, 2013 settlement with Fifth Third Bank. The agreement included a $48,000 civil money penalty and a $475,000 administrative payment. It also included indemnification on 122 FHA-insured loans if they default.
Cincinnati-based Fifth Third allegedly didn’t comply with servicing requirements on distressed loans.
A settlement was reached with MLD Mortgage Inc. DBA The Money Store. The Florham Park, N.J.-based company was assessed a $60,000 civil money penalty, required to remit $2,315 to buy down an over-insured FHA loan and required to pay $357,250 to satisfy a past-due debt on loans it previously indemnified.
In Milford, Mich., Amera Mortgage Corp. settled alleged violations of underwriting requirements on 69 loans that it didn’t verify FHA eligibility on. Among other things, it also allegedly failed to include the name and Nationwide Mortgage Licensing System identification number of the loan originator in HUD’ systems and on loan documents, didn’t follow HUD requirements on branch originations and submitted false underwriting forms on loans involving a debarred individual.
Amera is required to pay a $348,300 civil money penalty and indemnify HUD on 21 mortgages.
U.S. Bank agreed to a settlement that includes a $30,000 civil money penalty. According to HUD, the Minneapolis-based company failed to have FHA-insured multifamily mortgages serviced by an approved FHA mortgagee. In addition, it permitted escrow funds to be used for a purpose other than what they were intended for.
A full list of the mortgagee actions is listed in the table at the bottom of this page.
HUD reported that three mortgagees agreed to settlements and were required to pay civil money penalties of either $3,500 or $7,500 for not being on time with annual recertification requirements.
In addition, the Mortgagee Review Board voted to withdraw the FHA approval of another 22 mortgagees for one year because they allegedly weren’t in compliance with annual recertification requirements. Among this group was Fairway Independent Mortgage Corp. DBA Residential Mortgage Corp. in Montgomery, Ala.
| Mortgagee | Location | Date | Civil Money Penalty / Administrative Other Payments | Alleged Actions |
| Amera Mortgage Corp. | Milford, Mich. | Apr 23, 2013 | $348,300 | Indemnification for violating U/W requirements on 69 loans; no branch QC; NMLS #s missing; branch misrepresentation to HUD; debarred individual connection to 6 false loan files; false recertifications. |
| American Southwest Mortgage Corp. | Oklahoma City | Nov 14, 2013 | $127,899 | Settled amount owed on 2 indemnifications. |
| AmeriSave Mortgage Corp. | Atlanta | Jul 18, 2013 | $131,500 | Missing NMLS #s on 526 loans. |
| Ark Mortgage Inc. | North Brunswick, N.J. | Oct 28, 2013 | $175,000 | Failed to establish & implement QC plan; failed to verify borrowers’ source of closing funds; failed to ensure 3rd party faxed documents; Co. president personally paid $125k; FHA approval voluntarily withdrawn. |
| BJV Financial Services Inc. DBA Forum Mortgage Bancorp | Chicago | Jun 13, 2013 | $209,000 | Settlement over noncompliance w/QC requirements; failure to disclose affiliated business arrangements; unallowable fees; unresolved loan document conflicts; false certification. |
| Capital Financial Mortgage Corp. | Folsom, Pa. | Nov 3, 2013 | na | FHA approval permanently withdrawn for failure to notify HUD of state securities suspension; failed to fund 4 loans; failed to notify HUD operations suspended; failed to submit annual certification & submit annual documents. |
| Crossfire Financial Network | Miami | May 30, 2013 | na | Referred to OIG & general counsel for approving illegible cashout. |
| Equity Loans LLC | Atlanta | Sep 18, 2013 | $73,000 | Falsely certified annual certifications; failed to timely notify HUD of state gov actions; failed to maintain QC plan; failed to review early payment defaults; failed to ensure compliance with HUD/FHA origination guidelines. |
| Equity Source Home Loans LLC | Morganville, N.J. | Feb 4, 2014 | $7,500 | FHA approval withdrawn for failure to comply with annual recertification requirements; failure to timely remit MIPs. |
| Fifth Third Bank | Cincinnati | Oct. 7, 2013 | $523,000 | Agreed to indemnify HUD on 122 loans for 5 yrs for failing to property service loans; noncompliance w/loss mitigation requirements; failure to comply with property preservation and inspection regulations; deficient reporting. |
| First Home Mortgage Corp. | Baltimore | May 10, 2013 | $250,000 | Failed to ensure non-employment of persons who couldn’t be involved w/FHA lending; failed to meet QC & other requirements; false certification made on annual certification. |
| Franklin First Financial LTD | Melville, N.Y. | July 18, 2013 | $66,500 | Indemnification for failing to ensure interested 3rd party faxed documents to resolve discrepancies; failing to adequately document borrower funds; failing to adequately verify income; failing to downgrade and manually underwrite loan; failing to verify borrower qualified for >90% LTV on new construction; improper streamline loan calculation w/o appraisal. |
| MLD Mortgage Inc. DBA The Money Store | Florham Park, N.J. | Sep 4, 2013 | $419,565 | Settlement & indemnification for failing to verify gift funds; exceeding max FHA loan amount; failing to analyze liabilities; charging commitment fee without rate lock guarantee at least 15 days prior to closing; failing to comply with settlement requirements. |
| MortgageAmerica Inc. | Birmingham, Ala. | Jan. 15, 2014 | $3,000 | Settlement for timely remission of monthly M.I. premiums. |
| Network Capital Funding Corp. | Irvine, Calif. | Feb 4, 2014 | $22,000 | Settlement over submission of false certifications omitting federal proceedings or investigations and not timely submitting audited financial statements. |
| Precision Funding Group LLC | Cherry Hill, N.J. | June 27, 2012 | na | FHA approval withdrawn for failing to submit audited financial and failing to adequately document source of closing funds. |
| R.H. Lending Inc. | Colleyville, Texas | June 12, 2013 | $295,000 | Settlement & indemnification for noncompliance on construction-permanent requirements; not obtaining lien certifications & construction loan agreements; noncompliance with construction-permanent disbursement & draw requirements; failing to obtain complete sales agreement; failing to ensure mfg housing eligible for FHA insurance; noncompliance with borrower funds verification requirements; exceeding maximum allowable LTV; charging excessive unearned fee. |
| TXL Mortgage Corp. | Houston | Aug. 7, 2013 | $124,000 | Settlement for not ensuring exclusive employment of FHA originators; noncompliance with FHA branch requirements; not using correct mortgagee identification number; noncompliance with data entry on sponsored originators; failing to document pre-insurance reviews; failing to verify LOs’ NMLS ID accurately inputted. |
| U.S. Bank, N.A. | Minneapolis | April 9, 2013 | $30,000 | Settlement for failing to have FHA multifamily loans serviced by approved mortgagee; noncompliance with escrow funds requirements. |
| Webster Bank, N.A. | Cheshire, Conn. | March 11, 2013 | $67,206 | Settlement and indemnification |
