[Federal Register Volume 62, Number 88 (Wednesday, May 7, 1997)]
[Notices]
[Pages 24967-24968]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-11810]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4209-N-02]


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: Morris E. Carter, Director, Office of 
Lender Activities and Program Compliance, 451 Seventh Street, S.W., 
Washington, DC 20410, telephone: (202) 708-1515. (This is not a toll-
free number). A Telecommunications Device for Hearing and Speech-
Impaired Individuals (TTY) is available at l-800-877-8339 (Federal 
Information Relay Service).

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 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, 1997 through April 11, 1997.

1. Barrons Mortgage Corporation, Brea, California

Action: Settlement Agreement that includes: indemnification to the 
Department for claim losses in connection with seven improperly 
originated property improvement loans under the HUD-FHA Title I 
property improvement loan program; payment to the Department of a civil 
money penalty in the amount of $2,000; and corrective action to assure 
compliance with HUD-FHA requirements.
    Cause: A HUD monitoring review that disclosed violations of HUD-FHA 
Title I program requirements that included: use of alleged false tax 
returns to qualify borrowers for loans; accepting verifications of 
employment and W-2 forms containing inconsistent information to qualify 
borrowers; permitting non-approved brokers to originate loans; 
accepting insufficient cost estimates; and use of misleading 
advertising.

2. Comstock Mortgage, Sacramento, California

    Action: Settlement Agreement that includes: payment to the 
Department of a civil money penalty in the amount of $4,000; and 
corrective action to assure compliance with HUD-FHA requirements.
    Cause: A HUD monitoring review that cited violations of HUD-FHA 
requirements that included: failure to comply with reporting 
requirements under the Home Mortgage Disclosure Act (HMDA); and failure 
to maintain an adequate Quality Control Plan for the origination of 
HUD-FHA insured mortgages.

3. Associate Trust Financial Services, Inc., Camp Springs, Maryland

    Action: Withdrawal of HUD-FHA mortgagee approval.
    Cause: Submission of false credit reports to HUD-FHA in connection 
with the origination of HUD-FHA insured mortgages; and failure to 
notify HUD-FHA of program violations.

4. Eastwood Mortgage Bankers, Ltd., Jericho, New York

    Action: Withdrawal of HUD-FHA mortgagee approval and a proposed 
civil money penalty of $75,000.
    Cause: A HUD monitoring review that disclosed violations of HUD-FHA 
requirements that included: using alleged fraudulent W-2 forms to 
verify mortgagors' employment; failure to ensure that mortgagors met 
their minimum required investment; failure to verify the source and/or 
adequacy of mortgagors' funds to close; failing to conduct face-to-face 
interviews with mortgagors; failing to conduct timely quality control 
reviews; using ``strawbuyers'' to qualify for FHA insured mortgages; 
closing loans that were not in accordance with the sales contract; 
permitting improper third party loan originations by a mortgage broker 
and paying ``kickbacks'' to such broker for referrals; submitting HUD-l 
Settlement Statements that are not an accurate reflection of the 
transaction; charging mortgagors unallowable fees; and using incomplete 
gift letters.
    5. Continental Capital Corp., Huntington Station, New York
    Action: Proposed Settlement Agreement that would include 
indemnification to the Department for any claim losses in connection 
with 14 improperly originated HUD-FHA insured mortgages; corrective 
action to assure compliance with HUD-FHA requirements; and payment to 
the Department of a civil money penalty in the amount of $40,000.
    Cause: A HUD monitoring review that cited violations of HUD-FHA 
home mortgage insurance program requirements that included: use of 
alleged falsified documentation or conflicting information to approve 
HUD-FHA mortgagors; failure to properly verify the source and/or 
adequacy of mortgagors' funds used for the downpayment and/or closing 
costs; closing loans that exceeded HUD-FHA maximum mortgage amounts; 
submitting loans for insurance endorsement that are in default; failure 
to adequately verify mortgagor's income; failure to require necessary 
flood insurance; charging incorrect fees to mortgagors; failure to 
maintain a Quality Control Plan and perform timely quality control 
reviews; failure to properly analyze and evaluate mortgagors' credit 
history; and permitting mortgagors to sign documents in blank.

6. Consumer Home Mortgage, Inc., Melville, New York

    Action: Proposed Settlement Agreement that would include: 
indemnification to the Department for claim losses in connection with 
27 improperly originated HUD-FHA insured mortgages; corrective action 
to assure compliance with HUD-FHA requirements; and payment to the 
Department of a civil money penalty in the amount of $75,000.
    Cause: A HUD monitoring review that cited violations of HUD-FHA 
home mortgage insurance program violations that included: using alleged 
false information in originating HUD-FHA mortgage insurance; failure to 
ensure that mortgagors met their minimum required investment; failure 
to verify the source of funds for mortgagors' downpayment and/or 
closing costs; permitting mortgagors to sign documents in blank; adding 
non-occupant co-mortgagors to loans for the purpose of qualifying the 
mortgagors.

7. Madison Home Equities, Inc., Lake Success, New York

    Action: Proposed Settlement Agreement that would include: 
indemnification to the Department for claim losses in connection with 
31 improperly originated HUD-FHA insured mortgages; corrective action 
to assure compliance with HUD-FHA requirements; and payment to the

[[Page 24968]]

Department of a civil money penalty in the amount of $51,000.
    Cause: A HUD monitoring review that cited violations of HUD-FHA 
requirements that included: failure to properly verify and document the 
source of mortgagors' funds used for downpayment and closing costs; 
using unsubstantiated credit given to mortgagors in determining the 
mortgagors' investment; using alleged false information to originate 
HUD-FHA insured mortgages; submitting an alleged false property 
inspection report; miscalculating a mortgagor's required investment; 
failure to accurately reflect disbursements on HUD-l Settlement 
Statements; and failure to establish, maintain, and implement a Quality 
Control Plan in compliance with HUD-FHA requirements.

8. Mortgagees and Title I Lenders That Failed To Comply With HUD-FHA 
Requirements for the Submission of an Audited Annual Financial 
Statement and/or Payment of the Annual Recertification Fee

    Action: Withdrawal of HUD-FHA mortgagee approval and Title I lender 
approval.
    Cause: Failure to submit to the Department the required annual 
audited financial statement and/or remit the required annual 
recertification fee.

Mortgagees Withdrawn

    Salida Building and Loan Assn, Salida, CO; Lomas Mortgage New York 
Inc, Dallas, TX; United Bank of Griffin FSB, Griffin, GA; First United 
Savings Bank, FSB, Greencastle, IN; Macomb Savings and Loan Assn, Saint 
Clair Shores, MI; D M Bullard Mortgage Bankers, Kalamazoo, MI; 
Community Preservation Corp, New York, NY; Crusader Bank, Rosemont, PA; 
Chester Valley Bancorp, Downingtown, PA; Heritage Federal Bank FSB, 
Kingsport, TN; Lomas Financial Corporation, Dallas, TX; Lomas Mortgage 
USA, Inc, Dallas, TX; Midamerica Bank Hudson, Hudson, WI; First 
Washington Mortgage Corp, Herndon, VA; American Trust Mortgage Inc, San 
Jose, CA; Humboldt Mortgage Company, Eureka, CA; Dothan Federal Savings 
Bank, Dothan, AL; Unlimited Mortgage Services, Worthington, OH; 
Franklin Bank NA, Southfield, MI; Northside Mortgage Company, 
Chattanooga, TN; Farmers and Merchants Bank, Milford, NE; First 
Republic Savings Bank FSB, Roanoke Rapids, NC; CPC Resources Inc, New 
York, NY; First Fidelity Funding Corp, Fort Lauderdale, FL; Teico 
Financial Services Inc, Manalapan, NJ; Richmond Mortgage Corporation, 
Athens, GA; Glendale Federal Bank, Glendale, CA; Access Mortgage 
Incorporated, Milpitas, CA; Diversified Residential Funding, Altamonte 
Springs, FL; Delta Home Mortgage Incorporated, Sheridan, AR; First 
American Lending, Coral Gables, FL.

Title I Lenders Withdrawn

    Heritage Pullman Bk Trust Co, Chicago, IL; Devon Bank, Chicago, IL; 
Laurel Federal Savings and Loan, Laurel, MS; Lehigh Savings Bank SLA, 
Union, NJ; Lending Source, Folsom, CA; First Continental Mortgage Corp, 
Jonesboro, AR; Orange Coast Mortgage Inc, Irvine, CA; S and S Financial 
Inc, Woodland Hills, CA; Delta Acceptance Corp, Gonzales, LA.

    Dated: May 1, 1997.
Nicolas P. Retinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 97-11810 Filed 5-6-97; 8:45 am]
BILLING CODE 4210-27-P