[Federal Register Volume 66, Number 141 (Monday, July 23, 2001)]
[Notices]
[Pages 38302-38310]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-18330]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4558-N-05]


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: D. Jackson Kinkaid, Secretary to the 
Mortgagee Review Board, 451 7th Street, SW., Washington, DC 20410, 
telephone: (202) 708-3041 extension 3574 (this is not a toll-free 
number). A Telecommunications Device for Hearing and Speech-Impaired 
Individuals (TTY) is available at 1 (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, Public Law 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 June 1, 2000 through April 13, 2001.

1. 1st Republic Mortgage Bankers, Inc., Floral Park, NY

    Action: Settlement Agreement signed 12/21/2000. Without admitting 
fault or liability, 1st Republic Mortgage Bankers, Inc. (``1st 
Republic'') agreed to an administrative payment to HUD of $50,000. 1st 
Republic also agreed to indemnify HUD for any losses incurred on 19 
loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: 1st Republic failed to identify 
and resolve falsified or conflicting documentation prior to approving 
HUD/FHA mortgagors; 1st Republic failed to reconcile incongruities 
within the Uniform Residential Appraisal report prepared by the 
appraiser; 1st Republic failed to adequately document the mortgagor's 
source of funds used for the down payment and/or closing costs; and 1st 
Republic submitted HUD-1 settlement statements to the Department that 
contained false or inaccurate information.

2. American City Mortgage Corporation, Carson, CA

    Action: Settlement Agreement signed April 6, 2001. Without 
admitting fault or liability, American City Mortgage Corporation 
(``ACMC'') agreed to voluntarily withdraw from participation in all HUD 
programs and not to reapply for FHA mortgagee approval for three years. 
ACMC also agreed to pay a $50,000 civil money penalty.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: ACMC failed to provide quality 
control review reports during an on-site review; ACMC permitted false 
information to be used in originating four loans and obtaining HUD/FHA 
mortgage insurance; ACMC permitted loans to be submitted for HUD/FHA 
(single family) insurance on properties with more than four living 
units; ACMC permitted loan officers to originate loans on properties 
they owned either directly or indirectly and submit them for HUD/FHA 
mortgage insurance; ACMC failed to ensure that the borrower met the 
three percent minimum cash investment; and ACMC permitted loans to be 
approved without adequately analyzing the mortgagors' ability to make 
the mortgage payments.

3. American Investment Mortgage, Inc., Dallas, TX

    Action: In a letter dated October 24, 2000, the Board withdrew 
American Investment Mortgage, Inc.' (``AIM'') HUD/FHA approval for five 
years.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: AIM was operating Branch Offices 
as ``doing business as'' companies--``d/b/a companies''--under the net 
arrangement and/or was allowing a Branch Office to submit loans for 
underwriting prior to being approved to originate FHA insured loans; 
AIM accepted and processed loan applications from people not employed 
exclusively by AIM; AIM failed to implement a quality control plan 
prior to November 1998 and the one it did put in place failed to meet 
HUD/FHA requirements; AIM failed to timely submit Mortgage Insurance 
Premiums for 103 loans; AIM submitted 20 loans for endorsement more 
than 60 days after closing and failed to comply with the requirements 
for late endorsement; AIM used false information in originating FHA 
loans; AIM used inaccurate income to qualify the mortgagors or failed 
to properly verify employment for the mortgagors; AIM omitted mortgagor 
liabilities and/or the liabilities of the non-purchasing spouse were 
not considered in loan qualification; AIM failed to verify the source 
of funds, had insufficient documentation and submitted incomplete gift 
letters; AIM failed to perform underwriting within HUD/FHA established 
guidelines; AIM used non-traditional credit documentation to qualify 
mortgagors that did not meet HUD/FHA guidelines; AIM failed to provide 
dollar for dollar reduction to the sales price for inducement to 
purchase and/or make revisions to the maximum mortgage amount based on 
the actual closing costs paid by the mortgagor; AIM charged borrowers' 
fees that were not disclosed and/or were unallowable; AIM failed to 
clarify or document important file discrepancies;

[[Page 38303]]

and AIM failed to perform pre-approval field reviews.

4. American SkyCorp, Inc., Timonium, MD

    Action: In a letter dated November 17, 2000, the Board withdrew 
American SkyCorp, Inc.'s (``ASI'') HUD/FHA approval for five years. The 
Board also voted to impose a civil money penalty in the amount of 
$220,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: ASI permitted borrowers to 
receive seller contributions for down payment and closing costs that 
were disguised as gifts or grants in four loans; ASI used falsified 
documentation in originating loans and obtaining mortgage insurance in 
one loan; ASI approved loans with ratios that exceeded HUD/FHA 
guidelines without noting significant compensating factors in 15 loans; 
ASI failed to ensure that borrowers qualified for the FHA insured 
mortgages in 12 loans; ASI failed to adequately document and analyze 
income that was used to qualify the borrower in 8 loans; ASI failed to 
properly verify the source and adequacy of funds for the down payment 
and/or closing costs in 20 loans; ASI failed to reconcile conflicting 
information concerning the Uniform Residential Appraisal Report in one 
loan; ASI failed to obtain and analyze the terms and conditions of the 
real estate transaction and to consider the acquisition cost of 
recently acquired properties in the underwriting of one loan; ASI 
failed to ensure that all charges and credits to the borrower were 
reflected on the HUD-1 settlement statement in one loan; and ASI 
employed a loan officer who was not an exclusive employee.

5. Approved Home Mortgage Corp., Pembroke Pines, FL

    Action: Settlement Agreement signed 12/18/2000. Without admitting 
fault or liability, Approved Home Mortgage Corp. (``Approved'') agreed 
to a civil money penalty of $3,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Approved failed to implement its 
quality control plan; Approved failed to file annual loan origination 
reports for 1997 and 1998 which supplements the requirements of the 
Home Mortgage Disclosure Act; Approved failed to adopt, maintain and 
implement a Quality Control Plan that meets HUD guidelines; Approved 
failed to maintain complete origination files; and Approved charged an 
unacceptable fee.

6. Assurety Mortgage Group, Inc., Decatur, GA

    Action: In a letter dated October 24, 2000, the Board withdrew 
Assurety Mortgage Group, Inc.'s (``AMGI'') HUD/FHA approval for five 
more years. This was in addition to the three years imposed by the 
Board in its February 15, 2000 Notice to AMGI (see 65 FR at 53731, 
September 5, 2000). The Board also voted to impose a further civil 
money penalty of $150,000, which was in addition to the $45,500 penalty 
previously determined in the February 15, 2000 Notice.
    Cause: Follow up by Departmental Enforcement Center staff to the 
February 15, 2000 withdrawal notice revealed that AMGI violated HUD/FHA 
requirements, prudent lending practices and engaged in business 
practices that did not conform with accepted practices of an approved 
lender by the following: AMGI originated and/or provided underwriting 
approval for 90 loans in order to obtain HUD/FHA insurance after AMGI 
had been withdrawn by the Board; and AMGI opened 8 branches and added 
14 loan correspondents to originate and/or underwrite HUD/FHA insured 
loans after being withdrawn by the Board.

7. Avstar Mortgage Corporation, Blue Bell, PA

    Action: In a letter dated August 3, 2000, the Board withdrew Avstar 
Mortgage Corporation's (``Avstar'') HUD/FHA approval for eight years. 
The Board also voted to impose a civil money penalty in the amount of 
$192,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Avstar failed to conduct a face-
to-face interview with the mortgagors; Avstar failed to document the 
mortgagors' source of funds used for down payment or closing costs; 
Avstar failed to document two full years of employment for the 
mortgagors; Avstar knowingly approved loans with an ineligible 
borrower; Avstar used falsified documentation or conflicting 
information in originating loans and obtaining HUD/FHA mortgage 
insurance; Avstar failed to ensure that the borrowers met their minimum 
required investment; Avstar failed to provide lender credits in 
accordance with the Mortgage Credit Analysis Worksheet; Avstar approved 
loans where the verification forms passed through the hands of an 
interested third party; Avstar failed to use HUD assigned fee personnel 
in cases where the seller was an employee; Avstar charged a higher 
document preparation fee than permitted by HUD field offices having 
jurisdiction where the loans were originated; and Avstar failed to 
maintain a Quality Control Plan in compliance with HUD requirements.

8. Bankers Choice Mortgage Corp., Miami, FL

    Action: Settlement Agreement signed 2/7/2001. Without admitting 
fault or liability, Bankers Choice Mortgage Corp. (``BCMC'') agreed to 
a civil money penalty of $12,000. BCMC also refunded mortgagors in 
cases where unallowable fees were charged.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: BCMC failed to file an annual 
loan origination report for 1998 which supplements the requirements of 
the Home Mortgage Disclosure Act; BCMC failed to establish and maintain 
a Quality Control Plan for the origination of HUD/FHA insured 
mortgages; BCMC failed to address a conflict of interest issue in four 
loans; BCMC charged unacceptable fees in three loans; and BCMC failed 
to maintain complete origination files in seven cases.

9. Budget Mortgage Bankers, Ltd., Lake Success, NY

    Action: Settlement Agreement signed 11/28/2000. Without admitting 
fault or liability, Budget Mortgage Bankers, Ltd. (``Budget'') agreed 
to a civil money penalty of $15,000. Budget agreed to indemnify HUD for 
any losses incurred on 9 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Budget failed to maintain and 
implement a Quality Control Plan in compliance with HUD requirements; 
Budget failed to ensure falsified or conflicting documentation was not 
used to approve HUD/FHA mortgagors in 2 loans; Budget closed a loan 
that was overinsured by $867.35; Budget failed to properly underwrite a 
loan with a non-occupying co-borrower; Budget failed to properly verify 
income in 3 loans; and Budget failed to properly verify the source and 
adequacy of funds for the down payment and/or closing in 7 loans.

10. Capitol Mortgage Bankers, Inc., Millersville, MD

    Action: In a letter dated August 3, 2000, the Board withdrew 
Capitol Mortgage Bankers, Inc.''s (``Capitol'') HUD/FHA approval for 
five years. The Board also voted to impose a civil money penalty in the 
amount of $280,500.

[[Page 38304]]

    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: In 36 loans, Capitol relied upon 
inadequate and invalid compensating factors for loan approval in 
circumstances of excessive debt-to-income ratios; Capitol failed to 
identify and/or resolve false or conflicting documentation prior to 
approving HUD/FHA mortgages; Capitol failed to obtain required 
documentation in lieu of Verifications of Deposit; Capitol failed to 
properly verify the source and adequacy of funds for the down payment 
and/or closing; Capitol failed to close the loans in compliance with 
the loan approval; Capitol failed to adequately analyze income that was 
used to qualify the borrower; Capitol failed to ensure that the 
mortgagors' credit profile used to underwrite the loan met HUD/FHA 
requirements; and Capitol obtained endorsement for HUD/FHA insurance on 
an ineligible loan.

11. Community Home Mortgage Corporation, Melville, NY

    Action: Settlement Agreement signed January 15, 2001. Without 
admitting fault or liability, Community Home Mortgage Corporation 
(``CHMC'') agreed to a civil money penalty of $120,000. CHMC agreed to 
indemnify HUD for any losses incurred on 17 loans. [See 65 FR at 53732, 
September 5, 2000, for a prior notice of the proposed settlement.]
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: CHMC failed to maintain and 
implement a compliant quality control plan; CHMC failed to file annual 
loan origination reports since 1991 which supplement the requirements 
of the Home Mortgage Disclosure Act; CHMC failed to ensure 203(k) 
rehabilitation work was complete prior to release of escrow funds on 14 
loans; CHMC failed to ensure 203(k) rehabilitation completion within 6 
months of closing on seven loans; CHMC failed to ensure verification 
forms did not pass through the hands of an interested third party on 
one loan; CHMC failed to ensure that mortgagors met minimum required 
investment requirements on two loans; CHMC failed to adequately 
document source of funds for downpayment and/or closing costs on two 
loans; CHMC charged improper fees on one loan; and CHMC failed to 
properly document two full years of employment on one loan.

12. DMR Financial Services, Inc., Farmington Hills, MI

    Action: In a letter dated September 29, 2000, the Board withdrew 
DMR Financial Services, Inc.''s HUD/FHA approval for three years.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: DMR Financial Services, Inc. 
(``DMR'') failed to make timely payment of Upfront Mortgage Insurance 
Premiums (``UMIPs'') for 30 loans; DMR failed to include payment of 
UMIPs as a requirement of DMR's Quality Control Plan.

13. Executive Funding Services, Camp Springs, MD

    Action: Settlement Agreement signed April 6, 2001. Without 
admitting fault or liability, Executive Funding Services (``EFS'') 
agreed to a civil money penalty of $10,000. [See 65 FR at 53732, 
September 5, 2000, for a prior notice of the proposed settlement.]
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: EFS failed to maintain a Quality 
Control Plan; EFS failed to report Home Mortgage Disclosure data for 
1996, 1997, and 1998; EFS failed to meet specific requirements that 
apply to office facilities; EFS allowed the approving underwriter to be 
paid origination commission on the same transaction; EFS used falsified 
documentation or conflicting information in originating loans and 
obtaining HUD/FHA mortgage insurance; EFS closed loans that exceeded 
HUD/FHA maximum allowable mortgage amounts; EFS failed to properly 
verify the source and/or adequacy of funds for the downpayment and/or 
funds to close; EFS failed to maintain all records pertaining to the 
mortgage loan; EFS approved loans where the ratios exceeded HUD 
guidelines without compensating factors; EFS failed to adequately 
verify child support income; EFS failed to document two full years of 
employment; EFS approved loans where the verification forms passed 
through the hands of an interested third party; EFS failed to 
adequately document the satisfaction of collection accounts and 
judgments; and EFS failed to include all liabilities when calculating 
the mortgagor's total fixed payment to income ratio.

14. Farmers Bank, Greenwood, Arkansas

    Action: Settlement Agreement signed November 28, 2000. Without 
admitting fault or liability, Farmers Bank (``Farmers'') agreed to a 
civil money penalty of $40,000. Farmers agreed to indemnify HUD for any 
losses incurred on 9 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Farmers failed to ascertain 
whether the water supply was safe before submitting the loan for 
insurance in 1 loan; Farmers failed to establish that borrowers had 
sufficient funds to close in 6 loans; Farmers failed to include all 
borrowers' debts in the loan analysis in 2 loans; Farmers failed to 
consider contingent liability in 1 loan; Farmers failed to provide 
complete verification of employment documentation in 2 loans; Farmers 
failed to evidence whether required repairs to property had been 
completed in 1 loan; Farmers failed to establish the adequacy of a 
borrower's income in 1 loan; Farmers failed to consider a history of 
derogatory credit in approving one loan; and Farmers failed to follow 
HUD/FHA's late endorsement procedures in 3 loans.

15. FFS Mortgage Corporation, Miami Lakes, FL

    Action: Settlement Agreement signed 10/14/2000. Without admitting 
fault or liability, FFS Mortgage Corporation (``FFSMC'') agreed to a 
civil money penalty of $2000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: FFSMC failed to file an annual 
loan origination report for 1998 which supplements the requirements of 
the Home Mortgage Disclosure Act; FFSMC failed to establish, maintain 
and implement a Quality Control Plan for the origination of HUD/FHA 
insured mortgages; and FFSMC charged unallowable fees.

16. Fidelity Home Mortgage Corporation, Timonium, MD

    Action: Settlement Agreement signed 2/16/2001. Without admitting 
fault or liability, Fidelity Home Mortgage Corporation (``Fidelity'') 
agreed to a civil money penalty of $27,500. Fidelity agreed to 
indemnify HUD for any losses incurred on one loan. (See 65 FR at 53732, 
September 5, 2000, for a prior notice of the proposed settlement.)
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Fidelity failed to file annual 
loan origination reports for 1993 through 1998 which supplements the 
requirements of the Home Mortgage Disclosure Act; Fidelity failed to 
maintain separate accounts for MIP/escrow payments; Fidelity failed to 
maintain and implement an adequate Quality Control Plan; Fidelity 
failed to provide loan origination files and documents for review for 
11 loan files; Fidelity used falsified or conflicting documentation to 
approve mortgagors in one loan; and Fidelity failed to properly

[[Page 38305]]

verify income to approve mortgagors in 2 loans.

17. Financial Funding Services, Inc., Coral Gables, FL

    Action: Settlement Agreement signed 10/14/2000. Without admitting 
fault or liability, Financial Funding Services, Inc. (``FFSI'') agreed 
to a civil money payment of $2,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: FFSI failed to file an annual 
loan origination report for 1998 which supplements the requirements of 
the Home Mortgage Disclosure Act; FFSI failed to develop, implement, 
and maintain a Quality Control Plan for the origination of HUD/FHA 
insured mortgages; FFSI failed to use complete gift letters; FFSI 
failed to retain documents originating mortgagees are required to 
maintain; and FFSI failed to address a conflict of interest issue.

18. First United Mortgage Company, Kenilworth, NJ

    Action: Settlement Agreement signed 2/7/2001. Without admitting 
fault or liability, First United Mortgage Company (``FUMC'') agreed to 
a civil money penalty of $50,000. FUMC agreed to indemnify HUD for any 
losses on three loans. In addition, FUMC agreed to refund commitment 
fees, plus interest, to 16 mortgagors. (For the prior Federal Register 
notice on the proposed settlement agreement, see 65 FR at 53733, 
September 5, 2000.)
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: FUMC failed to file timely 
annual loan origination reports for 1994 through 1997 which supplements 
the requirements of the Home Mortgage Disclosure Act; FUMC failed to 
properly calculate a mortgagor's principal loan amount; FUMC released 
funds on a 203 (k) rehabilitation loan prior to the work being 
completed; FUMC used false documentation or conflicting information to 
approve HUD/FHA mortgagors for three loans; FUMC improperly charged 
commitment fees in 16 loans; and FUMC failed to maintain an adequate 
Quality Control Plan.

19. GAMA Mortgage Corporation, New Orleans, LA

    Action: Settlement Agreement signed June 8, 2000. Without admitting 
fault or liability, GAMA Mortgage Corporation agreed to a civil money 
penalty of $1,000. (For the prior Federal Register notice on the 
proposed settlement agreement, see 65 FR at 53733, September 5, 2000.)
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: GAMA Mortgage Corporation failed 
to file an annual loan origination report which supplements the 
requirements of the Home Mortgage Disclosure Act.

20. Gateway Funding Diversified Mortgage Services, Conshohocken, PA

    Action: Settlement Agreement signed January 22, 2001. Without 
admitting fault or liability, Gateway Funding Diversified Mortgage 
Services (``Gateway Funding'') agreed to a civil money penalty of 
$25,000. In addition, Gateway Funding paid HUD $2,095 to buy down the 
overinsured amounts for two loans. (For the prior Federal Register 
notice on the proposed settlement agreement, see 65 FR at 53733, 
September 5, 2000.)
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Gateway Funding failed to 
implement and maintain a Quality Control Plan in compliance with HUD/
FHA requirements; Gateway Funding failed to ensure that mortgagors met 
their minimum required investment; and Gateway Funding charged 
mortgagors fees that were not specifically permitted.

21. Greater Chicago Mortgage Corp., Tinley Park, IL

    Action: In a letter dated November 21, 2000, the Board withdrew 
Greater Chicago Mortgage Corp.'s HUD/FHA approval for three years.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Greater Chicago Mortgage Corp. 
(``GCMC'') failed to have, implement, and maintain an adequate Quality 
Control Plan that meets HUD guidelines; GCMC failed to maintain 
complete origination files in 6 loans; and GCMC failed to ensure loan 
documents did not pass through the hands of an interested third party 
in one loan.

22. Hanover Capital Mortgage Corporation, Edison, NJ

    Action: Settlement Agreement signed 8/8/2000. Without admitting 
fault or liability, Hanover Capital Mortgage Corporation agreed to a 
civil money payment of $5,000.
    Cause: HUD's legal services contractor reported that Hanover 
Capital Mortgage Corporation failed to disclose on the mortgagee 
certificate a negotiated agreement in which the mortgagor of the 
multifamily housing project agreed to pay extension fees for late 
completion of the project. This violated HUD requirements that the 
mortgagee disclose the financial terms of the agreement for HUD 
approval.

23. Heartland Mortgage, Inc., Tucson, AZ

    Action: In a letter dated 2/1/2001, the Board withdrew Heartland 
Mortgage, Inc.'s (``Heartland'') HUD/FHA approval for three years. The 
Board also voted to impose a civil money penalty in the amount of 
$33,000. This action resulted from the Department's inability to 
finalize a settlement agreement proposed at the March 13, 2000 
Mortgagee Review Board meeting, as noted in 65 FR at 53733 (September 
5, 2000).
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Heartland failed to implement 
its quality control plan; Heartland failed to file annual loan 
origination reports for 1997 and 1998 which supplements the 
requirements of the Home Mortgage Disclosure Act; Heartland employed 
two loan officers who were also real estate agents/brokers; Heartland 
failed to properly document gift letters in two loans; Heartland failed 
to properly document liabilities in one loan; and Heartland failed to 
maintain complete loan origination files in 7 loans.

24. Hollywood Mortgage, Inc., Palmdale, CA

    Action: Settlement Agreement signed February 7, 2001. Without 
admitting fault or liability, Hollywood Mortgage, Inc. (``Hollywood'') 
agreed to a civil money penalty of $40,000. The Department rescinded 
its Notice of Proposed Withdrawal dated April 3, 2000. [For the prior 
Federal Register notice on the proposed withdrawal, see 65 FR at 53733, 
September 5, 2000.]
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Hollywood failed to implement 
and maintain a quality control plan; Hollywood failed to report 
rejected and withdrawn loans under the Home Mortgage Disclosure Act 
(HMDA); Hollywood operated also as a real estate office using its 
office space and staff; and Hollywood allowed employees to work for 
more than one company involved in the real estate finance business at 
the same time.

25. Home Mortgage Company, Gardendale, AL

    Action: Settlement Agreement signed December 18, 2000. Without 
admitting fault or liability, Home Mortgage Company (``HMC'') agreed to 
a payment to HUD of $7,000.

[[Page 38306]]

    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Home Mortgage Company (``HMC'') 
failed to file an annual loan origination report for 1998 which 
supplements the requirements of the Home Mortgage Disclosure Act; HMC 
failed to establish, maintain, and implement a Quality Control Plan for 
the origination of HUD/FHA insured mortgages; and HMC allowed non-
employees to process loans to be insured by FHA.

26. Irwin Mortgage Corporation, Indianapolis, IN

    Action: Settlement Agreement signed June 8, 2000. Without admitting 
fault or liability, Irwin Mortgage Corporation (``Irwin'') agreed to 
indemnify HUD for any losses incurred in 16 loans. [For the prior 
Federal Register notice on the proposed settlement agreement, see 65 FR 
at 53734, September 5, 2000.]
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Irwin failed to follow HUD 
required procedures in calculating maximum mortgage amounts, thereby 
originating HUD/FHA loans that exceeded HUD limits; Irwin failed to 
reconcile discrepancies between its files and the Uniform Residential 
Appraisal Report; Irwin failed to conduct face-to-face interviews with 
prospective borrowers as certified on the Uniform Residential Loan 
Application (``URLA''); Irwin failed to properly verify the source and 
adequacy of the funds used for the down payment and/or closing costs; 
Irwin failed to adequately document income that was used to qualify the 
borrower; Irwin accepted a Power of Attorney signature for all 
documentation and failed to obtain the signature of the borrower on the 
draft or final URLA; Irwin failed to resolve conflicting file 
information; Irwin failed to obtain required signatures on origination 
documents; and Irwin failed to re-access CAIVRS when making more loans 
to a Section 203 (k) investor.

27. Island Mortgage Network, Inc., Melville, NY

    Action: Immediately suspended by letter dated August 3, 2000. 
[Note, this is a separate action from the immediate withdrawal noted at 
65 FR at 53734, September 5, 2000. The immediate nature of the 
withdrawal was resolved by a Settlement Agreement and the issue of 
withdrawal and civil money penalties are pending an administrative 
appeal.]
    Cause: On June 30, 2000, the New York State Banking Department 
suspended Island Mortgage Network, Inc.'s (IMN) license and issued a 
Notice of Hearing and Statement of Charges for IMN's license 
revocation. By allowing its license to be suspended, IMN failed to 
comply with HUD/FHA approval requirements.

28. Liberty Mortgage Corporation, Birmingham, AL

    Action: Settlement Agreement signed August 8, 2000. Without 
admitting fault or liability, Liberty Mortgage Corporation (``LMC'') 
agreed to a civil money penalty of $1,000. [For the prior Federal 
Register notice on the proposed settlement agreement, see 65 FR at 
53734, September 5, 2000.]
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: LMC failed to file annual loan 
origination reports for 1995 through 1999 which supplement the 
requirements of the Home Mortgage Disclosure Act; LMC failed to develop 
a Quality Control Plan in compliance with HUD/FHA requirements; and LMC 
failed to implement a Quality Control program in compliance with HUD/
FHA requirements.

29. Madison Home Equities, Inc., Lake Success, NY

    Action: Settlement Agreement signed July 7, 2000. Without admitting 
fault or liability, Madison Home Equities, Inc. (``MHE'') agreed to a 
civil money penalty of $71,500. MHE agreed to voluntarily withdraw from 
participation in all HUD programs and not to reapply for HUD/FHA 
mortgagee approval for five years. [For the prior Federal Register 
notice concerning an immediate withdrawal, see 65 FR at 53734, 
September 5, 2000.]
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: MHE falsely certified that it 
did not have a financial interest in Better Homes Depot, Inc.; MHE's 
President violated underwriting requirements prohibiting interested 
third parties from performing processing/review functions of borrowers' 
credit reports and verification forms; MHE used false documentation and 
failed to resolve conflicting information in HUD/FHA loan origination; 
in underwriting a loan, MHE ignored the borrower's substantial 
liability that was attributable to the borrower's home improvement loan 
that MHE's affiliate entity made to the borrower during the same period 
of time; MHE relied upon inadequate compensating factors for loan 
approval in circumstances of excessive debt-to-income ratios; MHE 
failed to adhere to HUD/FHA credit requirements for mortgage loan 
approval; MHE failed to ensure that the borrower met the requirements 
to purchase a three-unit property; MHE, by ignoring discrepancies 
between appraisal reports and sales contracts failed to ensure that the 
appraisals were reliable; and MHE failed to ensure that appraisals met 
the existing requirements of HUD/FHA for inclusion of at least one 
conventional comparable.

30. Mann Financial, Inc., d/b/a Mann Mortgage Financial Services, 
Kalispell, MT

    Action: Settlement Agreement signed 12/18/2000. Without admitting 
fault or liability, Mann Financial (``Mann'') agreed to a civil money 
penalty of $75,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Mann engaged in improper ``net 
branching'' practices; and Mann had not implemented a quality control 
plan in compliance with HUD requirements.

31. Mark 1 Mortgage, Glendale, CA

    Action: Settlement Agreement signed 10/14/2000. Without admitting 
fault or liability, Mark 1 Mortgage (``M1M'') agreed to a civil money 
penalty of $7,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: M1M failed to file annual loan 
origination reports for 1997 and 1998 which supplement the requirements 
of the Home Mortgage Disclosure Act; M1M failed to maintain an 
acceptable Quality Control Plan for the origination of HUD/FHA insured 
mortgages; M1M failed to ensure that its employees performing quality 
control reviews have no direct loan processing or underwriting 
responsibilities; and M1M allowed one of its loan officers to also work 
for another real estate business while employed with M1M.

32. Merit Mortgage Corporation, Boise, Idaho

    Action: Settlement Agreement signed 9/25/2000. Without admitting 
fault or liability, Merit Mortgage Corporation (``MMC'') agreed to a 
civil money penalty of $2000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: MMC failed to file annual loan 
origination reports for the years 1993-1999 which supplement the 
requirements of the Home Mortgage Disclosure Act; and MMC failed to 
maintain and implement a Quality

[[Page 38307]]

Control Plan in compliance with HUD requirements.

33. Milestone Mortgage Corporation, LaPalma, CA

    Action: In a letter dated January 23, 2001, the Board withdrew 
Milestone Mortgage Corporation's (``MMC'') HUD/FHA approval for five 
years. The Board also voted to impose a civil money penalty of $88,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: MMC used fraudulent documents, 
when it knew or had reason to know the documents used were false, in 
the origination of HUD/FHA insured loans; MMC allowed non-employees to 
take FHA loan applications; MMC failed to ensure that the mortgagors 
met their minimum required investment; MMC permitted ``strawbuyers'' to 
qualify for HUD/FHA insured mortgages; and MMC allowed mortgagors to 
sign documents in blank.

34. Molton, Allen & Williams Corporation, Birmingham, AL

    Action: Settlement Agreement signed June 8, 2000. Without admitting 
fault or liability, Molton, Allen & Williams Corporation (``MAW'') 
agreed to a civil money penalty of $20,000. [For the prior Federal 
Register notice on the proposed settlement agreement, see 65 FR at 
53735, September 5, 2000.] MAW agreed to indemnify HUD for any losses 
incurred in 15 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: MAW failed to initiate timely 
contact with delinquent mortgagors; MAW failed to conduct pre-
foreclosure reviews prior to approving foreclosure; MAW failed to 
evaluate all loss mitigation techniques when three full monthly 
installments were past due on the mortgage; MAW failed to notify all 
mortgagors of record of the mortgage default; MAW failed to meet the 
Department's monthly default reporting requirements; and MAW failed to 
implement and maintain an adequate Quality Control Plan for the 
servicing of HUD/FHA insured mortgages.

35. Morgan Home Funding Corporation, Rockville, MD

    Action: In a letter dated 2/12/2001, the Board withdrew Morgan Home 
Funding Corporation's (``MHF'') HUD/FHA approval for three years. The 
Board also voted to impose a civil money penalty of $25,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: MHF failed to implement a 
quality control plan; MHF failed to file annual loan origination 
reports for the years 1994-1998 which supplement the requirements of 
the Home Mortgage Disclosure Act; MHF failed to notify HUD when 
patterns of fraud were discovered; MHF used falsified documentation or 
conflicting information to originate loans and obtain HUD/FHA mortgage 
insurance; and MHF failed to provide loan origination files and 
documentation for review.

36. Mortgage Lending of America, Inc., Huntington Station, NY

    Action: In a letter dated August 17, 2000, the Board withdrew 
Mortgage Lending of America, Inc.'s (MLA) HUD/FHA approval for five 
years. The Board also voted to impose a civil money penalty of 
$533,500.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements relating to 97 loans with a 
nonprofit mortgagor: MLA failed to require the mortgagor to make the 
total investment noted on each HUD-1 settlement statement; MLA failed 
to reduce the sales price on all transactions by the amount of recent 
non-arms-length property sales; MLA failed to determine the source of 
funds for the mortgagor's total investment noted on each HUD-1 
settlement statement; MLA failed to provide true and accurate 
underwriter and mortgagee certifications; MLA failed to conduct the 
required application interview with the mortgagor for each transaction; 
MLA failed to adjust the sales price on each purchase transaction for 
known incentive payments made to the mortgagor; MLA failed to exclude a 
participant that was on the List of Parties Excluded from Federal 
Procurement and Non-procurement Programs; MLA failed to determine that 
minimum repair escrow eligibility requirements were met; MLA failed to 
obtain accurate appraisals; MLA failed to approve true and accurate 
construction draw requests; MLA failed to provide true and accurate 
HUD-1 settlement statements; MLA allowed the loan proceeds to be 
disbursed inaccurately; MLA failed to properly monitor the progress of 
rehabilitation work; and MLA failed to maintain an arms-length 
transaction with the closing agent.

37. National Charter Mortgage Corporation, Gardena, CA

    Action: In a letter dated September 29, 2000, the Board withdrew 
the HUD/FHA approval of National Charter Mortgage Corporation 
(``NCMC'') for 3 years. The Board also voted to impose a civil money 
penalty of $100,000. This action resulted from the Department's 
inability to finalize a settlement agreement with NCMC as noted in 65 
FR at 53736, September 5, 2000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: NCMC failed to conduct Quality 
Control reviews and to maintain an adequate written Quality Control 
Plan for origination of HUD/FHA insured mortgages; NCMC failed to 
comply with the HUD/FHA reporting requirements of the Home Mortgage 
Disclosure Act (HMDA); and NCMC failed to remit Up Front Mortgage 
Insurance Premiums within 15 days of loan closing, and to submit these 
loans for endorsement within 60 days of loan closing.

38. Northstar Mortgage Corporation, Dallas, TX

    Action: Settlement Agreement signed 4/6/2001. Without admitting 
fault or liability, Northstar Mortgage Corporation (``NMC'') agreed to 
a civil money penalty of $8,000. NMC agreed to indemnify HUD on any 
losses incurred on two loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: NMC failed to properly address 
derogatory credit information in two loans; NMC failed to properly 
verify the borrowers' effective income in one loan; NMC failed to 
properly verify the borrowers' source of funds for the down payment 
and/or closing costs in two loans; NMC filed to resolve inconsistencies 
on property appraisal reports in two loans; NMC failed to screen a 
borrower through the Credit Alert Interactive Voice Response System in 
one loan; NMC failed to complete loan documentation in three loans; and 
NMC used gift letters that did not meet HUD/FHA requirements in three 
loans.

39. Ocwen Federal Bank, FSB, West Palm Beach, FL

    Action: Settlement Agreement signed 12/18/2000. Without admitting 
fault or liability, Ocwen Federal Bank, FSB (``OFB'') agreed to an 
administrative payment of $50,000. OFB will include certain 
miscellaneous expenses as essential when calculating income available 
for payment.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: OFB failed to comply with the 
terms of the Loan Sale Agreement regarding forbearance agreements; and 
OFB failed

[[Page 38308]]

to provide HUD with sufficient information to respond to complaints.

40. Pacific Charter Mortgage Corporation, Los Alamitos, CA

    Action: Settlement Agreement signed January 18, 2001. Without 
admitting fault or liability, Pacific Charter Mortgage Corporation 
(``PCMC'') agreed to a civil money penalty of $100,000. PCMC agreed to 
indemnify HUD for any losses incurred on two loans. (For the prior 
Federal Register notice on the proposed settlement agreement, see 65 FR 
at 53736, September 5, 2000.)
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: PCMC failed to timely remit Up-
Front Mortgage Insurance Premiums; PCMC failed to submit loans to HUD/
FHA for endorsement in a timely manner; PCMC failed to segregate escrow 
funds; PCMC failed to implement and maintain a Quality Control Plan for 
Title I and Title II loan originations; PCMC failed to properly verify 
and/or document effective income; PCMC failed to document the source of 
funds; PCMC failed to properly evaluate mortgage credit risk; PCMC 
failed to include all liabilities in underwriting; PCMC operated as a 
real estate office, PCMC allowed non-employees to originate loans; and 
PCMC employed ineligible participants.

41. Republic Bank, d/b/a Capitol Mortgage, St. Petersburg, FL

    Action: Settlement Agreement signed 12/18/2000. Without admitting 
fault or liability, Republic Bank, d/b/a Capitol Mortgage agreed to the 
indemnification of one loan.
    Cause: HUD's Quality Assurance Division found that Republic Bank 
failed to provide requested 203(k) rehabilitation documentation for 
review.

42. Republic Mortgage Corp., now known as Old Kent Mortgage 
Company, Salt Lake City, UT

    Action: Settlement Agreement signed 4/6/2001. Without admitting 
fault or liability, Old Kent Mortgage Company agreed to a payment to 
HUD of $206,000. Old Kent Mortgage Company agreed to indemnify HUD for 
any losses incurred on up to 3 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Republic Mortgage Corp. operated 
branch offices under a net branch arrangement and accepted loans 
originated by entities not approved to do HUD business; Republic 
Mortgage Corp. allowed non-FHA approved entities to originate and 
process FHA loans using its lender ID number; Republic Mortgage Corp. 
accepted loans from FHA approved mortgagees who allowed non-approved 
entities the use of their FHA approval to originate, process, and close 
FHA insured loans using Republic Mortgage Corp.'s ID number, or an 
approved loan correspondent's ID number; Republic Mortgage Corp. failed 
to provide evidence that properties met FHA eligibility criteria; 
Republic Mortgage Corp. failed to retain the entire case file 
pertaining to loan origination; Republic Mortgage Corp. used language 
on a Trust Deed Note requiring mortgagors to pay interests on advances 
of escrow account balances on no-cost streamline refinances; and 
Republic Mortgage Corp. charged fees of $50, $300, and $350 in four 
loans which were not in compliance with HUD guidelines.

43. Rhode Island Housing and Mortgage Finance Corporation, 
Providence, RI

    Action: Settlement Agreement signed June 8, 2000. Without admitting 
fault or liability, Rhode Island Housing and Mortgage Finance 
Corporation (``RIHMFC'') agreed to a civil money penalty of $16,500. 
[For the prior Federal Register notice on the proposed settlement 
agreement, see 65 FR at 53736, September 5, 2000.]
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements RIHMFC failed to conduct Quality 
Control reviews and failed to have a written Quality Control Plan; 
RIHMFC failed to properly document loss mitigation efforts; RIHMFC 
failed to conduct property inspections timely or at all; RIHMFC failed 
to initiate management reviews of forbearance, deed-in-lieu and 
foreclosure recommendations; RIHMFC failed to issue ``How to Avoid 
Foreclosure'' pamphlets in a timely manner or at all; RIHMFC failed to 
identify the reason for default; RIHMFC failed to provide acceptable 
methods of forbearance relief; RIHMFC failed to adequately contact 
delinquent borrowers by telephone; RIHMFC failed to accurately report 
defaulted loans to HUD/FHA; and RIHMFC failed to comply with HUD's 
policies regarding paid-in-full loans.

44. Security National Mortgage Company, Murray, UT

    Action: Settlement Agreement signed 11/28/2000. Without admitting 
fault or liability, Security National Mortgage Company (``SNMC'') 
agreed to a civil money penalty of $75,000. SNMC agreed to indemnify 
HUD for any losses incurred on 18 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: SNMC failed to comply with its 
own policy and procedures pertaining to discontinuing impermissible net 
branch arrangements outlined in a July 17, 1997 letter to the 
Department; SNMC accepted loans originated by personnel not employed by 
or not exclusively employed by SNMC; SNMC accepted loans originated by 
non-HUD approved entities; SNMC paid fees/compensation to unauthorized 
entities or individuals in connection with FHA insured mortgages; SNMC 
certified to inaccurate HUD-1 settlement statements; SNMC failed to 
require complete gift letters; SNMC failed to retain the entire case 
file pertaining to loan origination; and SNMC closed a loan in excess 
of the maximum allowable resulting in an over-insured mortgage.

45. Shore Financial Group, Fresno, CA

    Action: Settlement Agreement signed 2/7/2001. Without admitting 
fault or liability, Shore Financial Group (``SFG'') agreed to a civil 
money penalty of $6,000. In addition SFG paid HUD $38,237.87 for losses 
incurred on one loan.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: SFG failed to maintain and 
implement a quality control plan in compliance with HUD requirements; 
SFG failed to file annual loan origination reports for the years 1995 
through 1999, which supplement the requirements of the Home Mortgage 
Disclosure Act; SFG allowed non-employees to originate HUD/FHA mortgage 
loans; SFG used false information in originating FHA loans and 
obtaining HUD/FHA mortgage insurance; and SFG failed to maintain 
complete origination files.

46. SimCorp Mortgage Corporation, Aliquippa, PA

    Action: Settlement Agreement signed December 18, 2000. Without 
admitting fault or liability, SimCorp Mortgage Corporation (``SMC'') 
agreed to a civil money penalty of $1,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: SMC failed to have, implement, 
and maintain an adequate Quality Control Plan that meets HUD 
guidelines.

47. SMN Mortgage Corp., Rio Piedras, Puerto Rico

    Action: In a letter dated 9/21/2000, the Board withdrew SMN 
Mortgage Corp's HUD/FHA approval for three years.

[[Page 38309]]

    Cause: HUD's Quality Assurance Division found that SMN Mortgage 
Corp. violated HUD/FHA requirements by failing to ensure that mortgage 
brokers not approved by HUD/FHA did not participate in the origination 
and processing of 41 loans insured by the Department.

48. Somerset Investors Corp., Ozone Park, NY

    Action: Settlement Agreement signed 11/28/2000. Without admitting 
fault or liability, Somerset Investors Corp. (``Somerset'') agreed to a 
civil money penalty of $3,000. Somerset agreed to indemnify HUD for any 
losses incurred on 3 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Somerset failed to file annual 
loan origination reports for the years 1996, 1997, and 1998, which 
supplement the requirements of the Home Mortgage Disclosure Act; 
Somerset failed to properly verify the source and adequacy of funds for 
the down payment and/or closing costs in 2 loans; Somerset failed to 
adequately verify the income used to qualify the borrowers in 1 loan; 
Somerset failed to resolve conflicting information contained in the 
property appraisal and other documents in the file in 1 loan; and 
Somerset failed to have, implement and maintain an adequate Quality 
Control Plan that meets HUD guidelines.

49. Southern Mortgage Investment Corp., Marietta, GA

    Action: Settlement Agreement signed 11/28/2000. Without admitting 
fault or liability, Southern Mortgage Investment Corp. (``SMIC'') 
agreed to a civil money penalty of $1000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: SMIC failed to develop, 
implement, and maintain a Quality Control Plan.

50. Specialty Mortgage Corporation, Hialeah, FL

    Action: In a letter dated February 5, 2001, the Board withdrew 
Specialty Mortgage Corporation's (``SMC'') HUD/FHA approval for three 
years. In addition, the Board voted to impose a civil money penalty of 
$8,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: SMC failed to establish, 
maintain and implement a Quality Control Plan; SMC used false documents 
to originate HUD/FHA mortgages; and SMC failed to maintain complete 
origination files in 11 loans.

51. Summit Mortgage Corporation, Houston, TX

    Action: Settlement Agreement signed December 18, 2000. Without 
admitting fault or liability, Summit Mortgage Corporation (``Summit'') 
agreed to a civil money penalty of $75,000. Summit agreed to indemnify 
HUD for any losses on 19 loans. [For the prior Federal Register notice 
on the proposed settlement agreement, see 65 FR at 53736, September 5, 
2000.]
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Summit falsely certified 
mortgagors' income and/or number of dependents to the HUD-funded HOME 
and/or State Program to obtain unwarranted grants for downpayments; 
Summit used false information in originating FHA loans and obtaining 
HUD/FHA mortgage insurance; Summit falsely certified that Verifications 
of Employment were sent directly to the applicants' employers and/or 
provided false verbal employment certifications; Summit provided false 
Traditional and/or Non-Traditional credit documentation to qualify 
mortgagors and/or accepted Non-Traditional credit documentation that 
does not meet FHA guidelines; Summit failed to verify the source of 
funds required for closing; Summit failed to provide a dollar-for-
dollar reduction to the sales price for an inducement to purchase; 
Summit used inaccurate income to qualify a mortgagor; Summit failed to 
clarify or document major file discrepancies; Summit failed to perform 
Direct Endorsement underwriting within HUD/FHA established guidelines; 
Summit failed to perform pre-approved field reviews; and Summit failed 
to require complete gift letters.

52. Sunstate Mortgage, Inc., d/b/a Sun America Mortgage, Daytona 
Beach, FL

    Action: Immediately suspended by letter dated December 13, 2000.
    Cause: On October 25, 2000, the State of Rhode Island Department of 
Business Regulation issued an Emergency Order Suspending the Lender 
License of Sunstate Mortgage (``SM''). On October 26, 2000, the State 
of Rhode Island issued an Emergency Order withdrawing SM's approval to 
conduct lending activity. By allowing its license to be suspended and 
withdrawn, SM failed to comply with HUD/FHA approval requirements.

53. SunTrust Mortgage, Inc., f/k/a Crestar Mortgage Company, 
Richmond, VA

    Action: Settlement Agreement signed 2/7/2001. Without admitting 
fault or liability, SunTrust Mortgage, Inc. (``SunTrust'') agreed to a 
civil money penalty of $25,000. SunTrust also agreed to indemnify HUD 
for any losses incurred on 19 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: SunTrust failed to ensure that 
repairs were completed prior to the release of escrow funds in 7 loans; 
SunTrust failed to ensure that contractors obtained the required 
building permits in 8 loans; SunTrust failed to provide adequate 
descriptions of each work item in the 203(k) plans in 22 loans; 
SunTrust failed to acquire prior approval of the mortgagor and 
underwriter prior to allowing contingency reserves to be used in 23 
loans; SunTrust failed to document the stability of income in one loan; 
SunTrust failed to verify the source of funds used for the down payment 
and/or closing costs in one loan; and SunTrust failed to provide 
different choices to mortgagors regarding the selection of 203(k) 
consultants and/or general contractors in 5 loans.

54. Union Planters Bank, Cordova, TN

    Action: Settlement Agreement signed 12/21/2000. Without admitting 
fault or liability, Union Planters Bank (``UPB'') agreed to a payment 
of $30,000. UPB indemnified HUD $21,308.59 for losses incurred in one 
loan. In addition, UPB agreed to indemnify HUD for any losses incurred 
on eight other loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: UPB failed to adequately 
document the sufficiency and/or source of funds required to close loan 
transactions; UPB failed to adequately document the liabilities of a 
non-purchasing spouse; UPB failed to calculate the applicant's income 
properly and omitted liabilities in the loan analysis resulting in an 
excessive debt to income ratio; UPB failed to clarify or document an 
important file discrepancy and approved a loan with an unpaid judgment 
on a borrower who was a questionable credit risk; UPB failed to resolve 
discrepancies related to paid earnest money deposits; and UPB failed to 
follow HUD's guidelines in verifying a borrower's employment.

55. Whitehall Funding Inc., Indianapolis, IN

    Action: In a letter dated December 20, 2000, the Board withdrew 
Whitehall Funding, Inc.'s (``Whitehall'') HUD/FHA approval for five 
years. In addition, the Board voted to impose a civil money penalty of 
$5,500.00.

[[Page 38310]]

    Cause: HUD acquired information that revealed the following serious 
violation of HUD/FHA requirements: Whitehall diverted and 
misappropriated reserve for replacement funds held on behalf of HUD 
Project No. 071-36627, Waterford Estates.

    Dated: July 2, 2001.
John C. Weicher,
Assistant Secretary for Housing-Chairman, Mortgagee Review Board.
[FR Doc. 01-18330 Filed 7-20-01; 8:45 am]
BILLING CODE 4210-27-P