[Federal Register Volume 60, Number 98 (Monday, May 22, 1995)]
[Notices]
[Pages 27116-27118]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-12460]



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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner
[Docket No. FR-3911-N-01]


Mortgagee Review Board Administrative Actions

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner, HUD.

ACTION: Notice.

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SUMMARY: In compliance with Section 202(c) of the National Housing Act, 
notice is hereby given of the cause and description of administrative 
actions taken by HUD's Mortgagee Review Board against HUD-approved 
mortgagees.
FOR FURTHER INFORMATION CONTACT: William Heyman, Director, Office of 
Lender Activities and Land Sales Registration, 451 Seventh Street, SW., 
Washington, DC 20410, telephone (202) 708-1515. The Telecommunication 
Device for the Deaf (TDD) number is (202) 708-4594. (These are not 
toll-free numbers).

SUPPLEMENTARY INFORMATION: Section 202(c)(5) of the National Housing 
Act (added by Section 142 of the Department of Housing and Urban 
Development Reform Act of 1989 (Pub.L. 101-235), approved December 15, 
1989) requires that HUD ``publish in the Federal Register a description 
of and the cause for administrative action against a HUD-approved 
mortgagee'' by the Department's Mortgagee Review Board. In compliance 
with the requirements of Section 202(c)(5), notice is hereby given of 
administrative actions that have been taken by the Mortgagee Review 
Board from January 1, 1995 through March 31, 1995.

1. Randall Mortgage, Inc., Maitland, Florida

    Action: Proposed Settlement Agreement that includes indemnification 
to the Department for any claim losses in connection with seven 
improperly originated loans; payment to the Department of a civil money 
penalty in the amount of $2,500; and corrective action by the company 
to assure compliance with HUD-FHA requirements.
    Cause: A HUD monitoring review that disclosed violations of HUD-FHA 
requirements that included: Failure to maintain an adequate Quality 
Control Plan for the origination of HUD-FHA insured mortgages; failure 
to verify borrowers' source of funds used for downpayment; failure to 
ensure that borrowers made the minimum required investment in the 
property; requiring a borrower to deposit excess escrow funds at 
closing; inadequate or lack of face-to-face interviews with borrowers; 
and failure to properly complete HUD Form 92900 Applications.

2. West Star Financial Corporation, Centennial Park, Arizona

    Action: Settlement Agreement that includes payment to the 
Department of a civil money penalty in the amount of $35,000; 
indemnification for any claim loss in connection with an improperly 
originated loan; corrective action to assure compliance with HUD-FHA 
requirements; and submission of a report to the Board compiled by an 
independent Certified Public Accountant at the end of a six-month 
period with respect to the company's compliance with HUD-FHA 
requirements.
    Cause: A HUD monitoring review which disclosed violations of HUD-
FHA loan servicing and origination requirements that included: Failure 
to maintain an adequate Quality Control Plan for the servicing and 
origination of HUD-FHA insured mortgages; failure to maintain staff 
trained in HUD-FHA requirements; failure to properly service delinquent 
mortgages; failure to properly administer the assignment program; 
failure to comply with property inspection, preservation and protection 
requirements; failure to refund excess escrow funds to mortgagors; 
failure to establish controls to ensure timely mortgagor escrow 
payments; failure to remit accurate [[Page 27117]] mortgage insurance 
premiums; failure to enter into reasonable forebearance agreements; 
failure to meet the reporting requirements of the Single Family Default 
Monitoring System; failure to timely remit One-Time Mortgage Insurance 
Premiums; payment of loan origination fees not proportionate to the 
value of work performed; and failure to ensure that borrowed funds were 
not used to close a HUD-FHA insured mortgage.

3. F.C. Chadwick Financial, Cerritos, California

    Action: A Settlement Agreement that includes indemnification to the 
Department for any claim losses in connection with six improperly 
originated Title I loans; and corrective action to assure compliance by 
the company with HUD-FHA Title I program requirements.
    Cause: A HUD monitoring review that cited violations by the company 
of HUD-FHA Title I property improvement loan program requirements which 
included: Operating an unapproved branch office; payment of ineligible 
referral fees; failure to verify the source of borrowers' initial 
payment; and failure to meet program requirements for the promissory 
note.

4. First Financial Funding Group, Mission Viejo, California

    Action: Settlement Agreement that includes indemnification to the 
Department for any claim losses in connection with five improperly 
originated Title I loans; payment to the Department of a civil money 
penalty in the amount of $1,000; and corrective action to assure 
compliance with HUD-FHA Title I program requirements.
    Cause: A HUD monitoring review that cited violations by the company 
of HUD-FHA Title I property improvement loan program requirements that 
included: Failure to document the source of funds required for the 
borrowers' initial payment; failure to ensure that borrowers provided 
detailed descriptions of work improvements; and failure to comply with 
HUD-FHA reporting requirements under the Home Mortgage Disclosure Act 
(HMDA).
5. Magna Financial Corporation, Irvine, California

    Action: Proposed Settlement Agreement that includes indemnification 
to the Department for any claim losses in connection with five 
improperly originated Title I loans; payment to the Department of a 
civil money penalty in the amount of $1,000; and corrective action to 
assure compliance with HUD-FHA requirements.
    Cause: A HUD monitoring review that disclosed violations by the 
company of HUD-FHA Title I property improvement loan program 
requirements that included: Failure to verify borrowers' source of 
funds required for initial payment; failure to property verify 
borrower's income; requiring a minimum loan amount; failure to meet 
program requirements for the promissory note; failure to ensure that 
detailed descriptions of improvements were provided by borrowers; and 
failure to comply with HUD-FHA reporting requirements under the Home 
Mortgage Disclosure Act (HMDA).

6. Greystone Servicing Corporation, Inc., New York, New York

    Action: Proposed Settlement Agreement that includes a payment to 
the Department and assurance by the company of compliance with the 
requirements of the Government National Mortgage Association (GNMA).
    Cause: Violation of GNMA requirements resulting from the improper 
termination of 57 GNMA mortgage-backed securities pools.

7. Whitehall Funding, Inc., Davenport, Iowa

    Action: Proposed Settlement Agreement that includes a payment to 
the Department and assurance by the company of compliance with the 
requirements of the Government National Mortgage Association (GNMA).
    Cause: Violation of GNMA requirements resulting from the improper 
termination of 13 GNMA mortgage-backed securities pools.

8. Washington Credit Union, Lynwood, Washington

    Action: Proposed Settlement Agreement that includes the payment of 
a civil money penalty to the Department in the amount of $10,000; 
indemnification for one improperly originated Title I loan; and 
corrective action to assure compliance with HUD-FHA Title I program 
requirements.
    Cause: A HUD monitoring review that disclosed violations of HUD-FHA 
Title I property improvement loan program requirements that included: 
Failure to comply with HUD-FHA reporting requirements under the Home 
Mortgage Disclosure Act (HMDA); failure to comply with dealer approval 
requirements; failure to report to HUD-FHA borrowers' uncompleted 
property improvements; failure to resolve a borrower complaint against 
a dealer; and failure to verify a borrower's source of funds for the 
required initial payment.

9. Indigo Mortgage Services, Inc., Santa Ana, California

    Action: Withdrawal of HUD-FHA mortgagee approval.
    Cause: Failure by the company to comply with the terms and 
conditions of a Settlement Agreement with the Department and to 
indemnify HUD in the amount of $49,724 for its claim loss in connection 
with an improperly originated HUD-FHA insured mortgage.

10. Beacon Mortgage Company, Dallas, Texas

    Action: Letter of Reprimand and proposed civil money penalty in the 
amount of $2,000.
    Cause: Failure by the company to comply with HUD-FHA requirements 
and to submit to the Department physical inspection reports with 
respect to two HUD-FHA insured multifamily projects.

11. Mortgage Systems, Inc., d/b/a Associated Mortgage Bankers, Las 
Vegas, Nevada

    Action: Withdrawal of HUD-FHA mortgagee approval and proposed civil 
money penalty in the amount of $75,000.
    Cause: A HUD monitoring review that cited the company for 
violations of HUD-FHA program requirements which included: Failure to 
comply with conditions of probation previously imposed by the Board; 
failure to implement an adequate Quality control Plan; failure to remit 
mortgage insurance premiums within l5 days after loan closing; failure 
to submit closed loans for endorsement within 60 days after loan 
closing; failure to meet annual recertification requirements regarding 
amount of liquid assets; submission of false information; failure to 
document the borrower's source of funds for downpayment and closing 
costs; failure to correctly calculate the borrower's income for loan 
approval; failure to ensure that the borrower made the minimum required 
investment; use of mortgage brokers to originate loans and payment of 
``kickbacks'' to such brokers; non-compliance with HUD's conflict-of-
interest prohibited payments provisions; failure to conduct face-to-
face interviews; and allowing loan correspondents to improperly close 
loans in the name of the company.

    [[Page 27118]] Dated: May 16, 1995.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 95-12460 Filed 5-19-95; 8:45 am]
BILLING CODE 4210-27-P