[Federal Register Volume 66, Number 237 (Monday, December 10, 2001)]
[Notices]
[Pages 63717-63723]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-30438]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4558-N-07]


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, P-
200, 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 April 14, 2001 through September 30, 2001.

1. 1st American Home Loan, Merrilville, IN

[Docket No. 01-1470-MR]

    Action: Settlement Agreement signed May 21, 2001. Without admitting 
fault or liability, 1st American Home Loan (``FAHL'') agreed to a civil 
money penalty of $7,000. FAHL also agreed to indemnify HUD for any 
losses incurred on one loan.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: FAHL failed to ensure that loan 
officers

[[Page 63718]]

worked exclusively for FAHL; FAHL paid referral fees to other lenders; 
FAHL failed to establish, maintain and implement a Quality Control 
Plan; and FAHL failed to maintain complete loan origination files for 
review.

2. Altiva Financial Corporation, Formerly Known as MEGO Mortgage 
Corporation, Atlanta, GA

[Docket No. 01-1428-MR]

    Action: In a letter dated May 18, 2001, the Board withdrew Altiva 
Financial Corporation's (``Altiva'') HUD/FHA approval for three years. 
The Board also voted to impose a civil money penalty of $104,500.
    Cause: HUD's Office of Inspector General made the following 
findings of violations of HUD/FHA requirements: Altiva failed to ensure 
that the loan amount did not exceed the cost of repairs described in 
the borrowers' Title I loan application in seventeen loans; Altiva 
failed to properly evaluate the borrowers' income and/or liabilities; 
Altiva failed to document the borrowers' source of funds for the 
initial payment; and Altiva failed to ensure that loan proceeds were 
only used for the eligible purposes cited in the loan application.

3. America's Mortgage, Inc., Roswell, GA

[Docket No. 00-1334-MR]

    Action: Settlement Agreement signed May 3, 2001. Without admitting 
fault or liability, America's Mortgage, Inc. (``AMI'') 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: AMI failed to file annual loan 
origination reports for 1996-1998, which supplements the requirements 
of the Home Mortgage Disclosure Act; AMI failed to establish, maintain 
and implement a Quality Control Plan in compliance with HUD/FHA 
requirements; and AMI failed to report to HUD a violation of law or 
regulation, false statement, or program abuse.

4. BancGroup Mortgage Corporation, Palos Hills, IL

[Docket No. 00-1159-MR]

    Action: Settlement Agreement signed August 28, 2001. Without 
admitting fault or liability, BancGroup Mortgage Corporation (``BMC'') 
agreed to a civil money penalty of $12,000. In addition, BMC agreed to 
refund all impermissible fees charged to borrowers on FHA/HUD loans it 
closed between September 1, 1998 and August 31, 1999.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: BMC failed to file annual loan 
origination reports for 1998, which supplements the requirements of the 
Home Mortgage Disclosure Act; BMC failed to establish, maintain and 
implement a Quality Control Plan in compliance with HUD/FHA 
requirements; BMC failed to retain documents originating mortgagees are 
required to maintain; BMC charged unallowable fees and allowed 
unexplained and/or pre-paid credits; and BMC failed to itemize on the 
HUD-1 Settlement Statement the items paid on behalf of the borrowers.

5. California Empire Financial Group, Inc., Rancho Cucamonga, CA

[Docket No. 00-1094-MR]

    Action: Settlement Agreement signed June 1, 2001. Without admitting 
fault or liability, California Empire Financial Group, Inc. (``CEFG'') 
agreed to a civil money penalty of $11,000. [For the prior Federal 
Register notice on the proposed settlement agreement, see 65 FR at 
53731, September 5, 2000.]
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: CEFG allowed non-employees to 
originate HUD/FHA loans; and CEFG allowed employees to act as real 
estate agents and loan officers.

6. Casey Duncan Group, Inc., Timonium, MD

[Docket No. 01-1447-MR]

    Action: In a letter dated May 8, 2001, the Board withdrew Casey 
Duncan Group, Inc.'s (``CDGI'') HUD/FHA approval for five years.
    Cause: In conjunction with a related MRB action, American SkyCorp, 
Inc., HUD's Departmental Enforcement Center observed the following 
violations of HUD/FHA requirements: CDGI failed to exclude participants 
that were suspended from participating in federal government programs; 
CDGI failed to meet basic lender approval requirements by its surrender 
of its license to originate mortgages in the State of Maryland; and 
CDGI failed to maintain the requirements for a main office.

7. Cendant Mortgage Corporation, Mt. Laurel, NJ

[Docket No. 01-1523-MR]

    Action: Settlement Agreement signed September 25, 2001. Without 
admitting fault or liability, Cendant Mortgage Corporation (``CMC'') 
agreed to a payment of $10,000. In addition, Cendant agreed to 
indemnify HUD for any losses incurred on 36 loans.
    Cause: HUD's Quality Assurance Division made the following finding 
of violations of HUD/FHA requirements: CMC allowed a non FHA approved 
lender, Select Financial Services, to originate 63 HUD/FHA insured 
loans.

8. Colonial Atlantic Mortgage, Silver Spring, MD

[Docket No. 00-1162-MR]

    Action: Settlement Agreement signed July 25, 2001. Without 
admitting fault or liability, Colonial Atlantic Mortgage (``CAM'') 
agreed to a civil money penalty of $4,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: CAM failed to file annual loan 
origination reports for 1997-1998, which supplements the requirements 
of the Home Mortgage Disclosure Act; CAM accepted faxed copies of 
required documents in 2 loans; and CAM failed to have, implement and 
maintain an adequate Quality Control Plan that meets HUD guidelines.

9. Columbia National, Inc., Columbia, MD

[Docket No. 01-1405-MR]

    Action: Settlement Agreement signed May 21, 2001. Without admitting 
fault or liability, Columbia National, Inc. (``CN'') agreed to an 
administrative payment of $24,000. CN also agreed to indemnify HUD for 
any losses incurred on 24 loans.
    Cause: CN self reported two loans to HUD after discovering fraud 
during the course of its own quality assurance audit of a branch office 
it later shut down. Thereafter, HUD's Quality Assurance Division 
initiated a review and made the following findings of violations of 
HUD/FHA requirements: CN used falsified documentation or conflicting 
information to originate loans and obtain HUD/FHA mortgage insurance; 
CN failed to document the borrower's source of funds used for down 
payment or closing costs; CN approved mortgage loans where loan 
origination documents passed through the hands of an interested third 
party; CN approved mortgage loans where the ratios exceeded HUD/FHA 
guidelines; CN approved mortgage loans where the borrower's stability 
of income was not adequately documented; CN failed to properly verify 
the borrower's previous rental history; CN approved mortgage loans 
where borrowers were charged fees which were not specifically permitted 
by HUD/FHA; CN failed to obtain insured ten year warranty plans from a 
HUD/FHA approved entity for high loan to value, new construction

[[Page 63719]]

loans; CN failed to obtain letters of credit reference where the 
borrower had not established traditional credit; CN failed to properly 
document the borrower's income; CN failed to ensure that the property's 
valuation conditions were met in accordance with HUD/FHA requirements; 
CN approved a mortgage loan with a reduced up-front mortgage insurance 
premium where the borrower did not meet the criteria for the reduced 
MIP as outlined by HUD/FHA requirements; and CN failed to ensure that 
the borrower met the minimum required cash investment.

10. Corona Hills Financial, Inc., d/b/a American Capitol Mortgage, 
Boise, ID

[Docket No. 00-1157-MR]

    Action: Settlement Agreement signed June 1, 2001. Without admitting 
fault or liability, Corona Hills Financial, Inc. d/b/a/American Capitol 
Mortgage (``ACM'') agreed to pay a civil money penalty of $5,500. ACM 
also agreed to surrender to HUD any assets that it accrued for the next 
5 years up to $60,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: ACM failed to file an annual 
loan origination report for 1998 which supplements the requirements of 
the Home Mortgage Disclosure Act; ACM used independent contractors to 
originate HUD/FHA insured loans; ACM used false documentation to 
originate HUD/FHA insured loans; ACM failed to provide complete loan 
origination files for review; ACM used income/employment documents that 
do not support the borrower's income; ACM failed to include all known 
liabilities in calculating the ratios; ACM failed to properly document 
the source of funds for a gift; and ACM used an expired conditional 
commitment.

11. Cypress Financial Mortgage Corporation, Inc., Davie, FL

[Docket No. 00-1163-MR]

    Action: In a letter dated May 18, 2001, the Board withdrew Cypress 
Financial Mortgage Corporation, Inc.'s (``Cypress'') HUD/FHA approval 
for three years. The Board also voted to impose a civil money penalty 
of $22,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Cypress failed to maintain and 
implement a Quality Control Plan; and Cypress used false information to 
originate loans to obtain HUD/FHA insurance and misrepresented the 
Title I program to borrowers.

12. DLM Financial Services Corporation, d/b/a First Financial 
Mortgage, a/k/a The Home Store, Fresno, CA

[Docket No. 01-1521-MR]

    Action: In a letter dated August 16, 2001, the Board withdrew DLM 
Financial Services Corporation's (``DLM'') [d/b/a First Financial 
Mortgage, a/k/a The Home Store] HUD/FHA approval for three years. The 
Board also voted to impose a civil money penalty of $65,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: DLM failed to maintain and 
implement a Quality control Plan in compliance with HUD requirements; 
DLM knowingly did business with a debarred, suspended, ineligible or 
voluntarily excluded individual; DLM used false information in 
originating an FHA insured loan; DLM allowed non-employees to originate 
HUD/FHA mortgage loans; DLM allowed employees to have dual employment; 
and DLM failed to retain complete origination files.

13. Eagle Home Loans and Realty, Inc., Sacramento, CA

[Docket No. 00-1129-MR]

    Action: Settlement Agreement signed May 21, 2001. Without admitting 
fault or liability, Eagle Home Loans and Realty, Inc. (``EHLR'') agreed 
to a civil money penalty of $1000. [For the prior Federal Register 
notice on the proposed settlement agreement, see 65 FR at 53732, 
September 5, 2000.]
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: EHLR failed to file annual loan 
origination reports for 1995 through 1999 which supplements the 
requirements of the Home Mortgage Disclosure Act; EHLR failed to 
maintain and implement a Quality Control Plan; EHLR shared office space 
with its parent company; and EHLR did not clearly identify the office 
space to the public.

14. First Funding Mortgage Bankers Corporation, Rosedale, NY

[Docket No. 00-1323-MR]

    Action: Settlement Agreement signed June 1, 2001. Without admitting 
fault or liability, First Funding Mortgage Bankers Corporation 
(``FFMBC'') agreed to a civil money penalty of $60,000. FFMBC also 
agreed to indemnify HUD for any losses incurred on 11 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: FFMBC failed to maintain a 
Quality Control Plan in compliance with HUD requirements; FFMBC failed 
to submit One Time Mortgage Insurance Premiums Payments within 15 days 
of loan closing; FFMBC failed to determine that borrowers met minimum 
cash investment requirements; FFMBC failed to verify the source and 
adequacy of funds for the down payment and/or closing costs; FFMBC 
failed to verify income used to qualify the borrower; and FFMBC failed 
to resolve conflicts in information contained within the loan file 
prior to loan closing.

15. First Union Mortgage Corporation, Raleigh, NC

[Docket No. 01-1536-MR]

    Action: Settlement Agreement signed September 18, 2001. Without 
admitting fault or liability, First Union Mortgage Corporation 
(``FUMC'') agreed to indemnify HUD for any losses incurred on 4 loans.
    Cause: HUD's Departmental Enforcement Center made the following 
findings of violations of HUD/FHA requirements resulting from a Quality 
Assurance Division review of Fidelity Home Mortgage Corporation, a loan 
correspondent that FUMC sponsored: FUMC failed to properly verify the 
source and adequacy of funds for the down payment and failed to 
properly verify income requirements.

16. Golden Home Mortgage Corporation, Concord, CA

[Docket No. 01-1471-MR]

    Action: Settlement Agreement signed August 28, 2001. Without 
admitting fault or liability, Golden Home Mortgage Corporation 
(``GHMC'') agreed to a civil money penalty of $20,000. In settlement, 
GHMC agreed to withdraw its appeal of the withdrawal of HUD/FHA 
approval for five years that the Board had imposed on GHMC in a letter 
dated January 29, 2001. It further agreed to forever forfeit its FHA 
approval.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: GHMC originated 19 HUD/FHA 
insured mortgages in which false statements were submitted to HUD and 
GHMC was aware of these false statements; GHMC failed to ensure that 
non-profit mortgagors did not exceed 10% profit on properties purchased 
from HUD with a 30 % discount; GHMC processed a loan that resulted in 
the Department over-insuring an FHA loan; GHMC failed to accurately 
prepare the closing instructions causing the sponsor to submit false 
and/or inaccurate HUD-1 Settlement Statements to the Department in 38 
loans; GHMC used

[[Page 63720]]

falsified documentation in originating an FHA loan; GHMC falsely 
certified that a repair condition, the repair of a swimming pool, had 
been satisfied in one loan; GHMC processed loans containing false and/
or inaccurate owner occupancy information in two loans; GHMC failed to 
properly document the transfer of gift funds in two loans; GHMC 
provided false statements and/or certifications concerning housing 
counseling in 16 loans; GHMC provided false information concerning 
face-to-face interviews, used non-employees to perform loan origination 
functions, and failed to meet face-to-face with first-time homebuyers 
in five loans; GHMC failed to process loan applications within HUD/FHA 
guidelines in four loans; GHMC charged unallowable fees on FHA loans in 
two loans; GHMC allowed a mortgagor to sign a blank document; and GHMC 
failed to file annual loan origination reports for 1996-1998, which 
supplements the requirements of the Home Mortgage Disclosure Act.

17. Herring National Bank, Vernon, TX

[Docket No. 01-1391-MR]

    Action: Settlement Agreement signed August 28, 2001. Without 
admitting fault or liability, Herring National Bank (``Herring'') 
agreed to a civil money penalty of $30,000. Herring also agreed to 
indemnify HUD for any losses incurred on 6 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Herring operated branch offices 
under prohibited branch arrangements; Herring failed to meet the 
requirements for late endorsements in three loans; Herring failed to 
adequately document the sufficiency and/or source of funds to close 
three transactions; Herring failed to support income used to qualify 
the mortgagor in one loan; and Herring failed to obtain the required 
field reviews on properties previously sold by HUD's Real Estate Owned 
Division in three loans.

18. Home Loan Mortgage Corporation, Hesperia, CA

[Docket No. 01-1426-MR]

    Action: Settlement Agreement signed May 3, 2001. Without admitting 
fault or liability, Home Loan Mortgage Corporation (``HLMC'') agreed to 
a civil money penalty of $144,000. HLMC also agreed to indemnify HUD 
for any losses incurred on 7 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: HLMC failed to maintain and 
implement a quality control plan in compliance with HUD requirements; 
HLMC failed to remit timely Up Front Mortgage Insurance Premiums; HLMC 
failed to segregate escrow funds; HLMC failed to submit loans for 
endorsement in a timely manner; HLMC submitted ineligible loans for 
endorsement; HLMC used other entities to originate loans through branch 
office arrangements; HLMC used independent contractors as loan 
originators; and HLMC failed to properly verify the source and adequacy 
of funds for the down payment and/or closing.

19. InterAmerican Mortgage Corporation, Rosedale, NY

[Docket No. 01-1482-MR]

    Action: Settlement Agreement signed July 25, 2001. Without 
admitting fault or liability, InterAmerican Mortgage Corporation 
(``IAMC'') agreed to pay HUD $524,256.79, representing losses HUD 
incurred on 5 loans that were part of a prior August 27, 1997 
Settlement Agreement with HUD.
    Cause: The Board followed up on IAMC's failure to indemnify HUD on 
five loans which were the subject of an August 27, 1997 Settlement 
Agreement. This failure to indemnify violated HUD regulations and 
breached the 1997 Settlement Agreement.

20. Intercoastal Funding Corporation, Huntington Beach, CA

[Docket No. 00-1320-MR]

    Action: Settlement Agreement signed May 3, 2001. Without admitting 
fault or liability, Intercoastal Funding Corporation agreed to a civil 
money payment of $11,000.
    Cause: HUD's Quality Assurance Division made the following finding 
of violations of HUD/FHA requirements: Intercoastal Funding Corporation 
failed to maintain and implement a Quality Control Plan in compliance 
with HUD requirements.

21. J & R Mortgage, Inc., San Mateo, CA

[Docket No. 00-1127-MR]

    Action: Settlement Agreement signed May 3, 2001. Without admitting 
fault or liability, J & R Mortgage, Inc. (``JRM'') agreed to a civil 
money penalty of $25,000. JRM also agreed to indemnify HUD for any 
losses incurred on 6 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: JRM used false information to 
originate 9 loans; JRM allowed non-employees to take loan applications 
in 9 loans; JRM permitted ``straw buyers'' to qualify for HUD/FHA 
insured mortgages in 3 loans; JRM failed to verify the source of funds 
used for borrowers' down payment and/or closing costs and thereby, did 
not ensure that borrowers met their minimum required investment in 4 
loans; and JRM allowed real estate agents to accept second deeds of 
trust and/or promissory notes from mortgagors in exchange for making 
the mortgagors' minimum required investment in 3 loans.

22. Johnson Mortgage Corporation, New Orleans, LA

[Docket No. 01-1514-MR]

    Action: Settlement Agreement signed July 25, 2001. Without 
admitting fault or liability, Johnson Mortgage Corporation (``JMC'') 
agreed to a payment of $16,500.
    Cause: HUD's Quality Assurance Division made the following finding 
of violations of HUD/FHA requirements: JMC failed to maintain and 
implement a Quality Control Plan in compliance with HUD/FHA 
requirements, despite previous findings on this requirement and JMC's 
assurance of corrective action.

23. Malone Mortgage Company America, Ltd., Carlsbad, CA

[Docket No. 00-1081-MR]

    Action: Settlement Agreement signed May 21, 2001. Without admitting 
fault or liability, Malone Mortgage Company America, Ltd. ``(MMC'') 
agreed to a civil money penalty of $100,000. MMC also agreed to 
indemnify HUD for any losses incurred on 4 loans. [For the prior 
Federal Register notice on the proposed settlement agreement, see 65 FR 
at 53735, September 5, 2000.]
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: MMC employed, as a loan officer, 
an individual who was concurrently working for the mortgagor entity and 
had an ownership interest in another lending institution; MMC's files 
were found to contain false completion inspections and 203(k) escrow 
draws; MMC charged consulting fees and inspection fees that were 
unearned; MMC originated single-family 203(k) mortgages for the purpose 
of financing the acquisition of multifamily housing complexes with the 
knowledge that title to the properties would be subsequently 
transferred to limited partnerships; MMC processed, approved and closed 
mortgages where the mortgagor failed to meet the minimum capital 
investment requirements due to the receipt of Low Income Housing Tax 
Credits; MMC failed to verify adequate funds from an acceptable source 
to be used to close the mortgages and to meet the reserve requirements 
after closing the FHA

[[Page 63721]]

insured mortgages; MMC provided FHA insured financing to a nonprofit 
where there was less than an arms-length transaction between the 
nonprofit's officers and entities providing goods and services; MMC 
permitted the nonprofit mortgagor to close on FHA insured mortgages and 
subsequently sell the properties via Contract for Deed; MMC originated 
FHA insured mortgages using Uniform Residential Appraisal Reports 
(URAR) that were found to be deficient, which resulted in overstated 
values; MMC escrowed and released excess amounts for mortgage payments; 
MMC did not properly value commercial space that was acquired by an 
affiliate of the mortgagor entity; MMC failed to properly account for a 
credit that was to have been given to the mortgagor from the seller, 
thereby reducing the acquisition cost; MMC used an incorrect sales 
price when determining acquisition cost for the purpose of calculating 
maximum mortgage amounts; MMC submitted to HUD for endorsement loans 
that were closed incorrectly; MMC closed and submitted for endorsement 
mortgages on properties that exceeded the 4 unit limit in effect for 
single-family programs; MMC failed to obtain as-is appraisals on 
properties that were acquired as part of bulk purchases; MMC originated 
inaccurate correspondence that was used by the mortgagor when applying 
for Low Income Housing Tax Credits; MMC permitted the mortgagor to 
receive payment for sweat equity for repair items completed by the 
mortgagor; MMC processed, approved, and closed loans where the 
properties were not eligible for 203(k) mortgage insurance; MMC failed 
to ensure that rehabilitation work was completed in a timely manner; 
MMC approved and closed a loan with a high loan to value ratio on a 
property that was less than one year old; and MMC failed to resolve 
discrepancies in documents used to originate FHA insured mortgages.

24. Marathon Financial Corporation, Southfield, MI

[Docket No. 00-1362-MR]

    Action: Settlement Agreement signed June 1, 2001. Without admitting 
fault or liability, Marathon Financial Corporation (``MFC'') agreed to 
a civil money penalty of $15,000. MFC also agreed to indemnify HUD for 
any losses incurred in one loan.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: MFC failed to make timely 
payments of Upfront Mortgage Insurance Premiums; MFC shared office 
space and commingled employees with Miracle Financial, a non-HUD 
approved lender; MFC failed to obtain and analyze the terms and 
conditions of the real estate transaction to consider the acquisition 
cost of recently acquired properties in the underwriting of loans; MFC 
failed to properly verify the source and adequacy of funds for the down 
payment and/or closing cost; MFC charged borrowers fees which are not 
in compliance with HUD/FHA guidelines; and MFC failed to maintain and 
implement a quality control plan in compliance with HUD requirements.

25. Marketplace Home Mortgage, LLC, Edina, MN

[Docket No. 01-1479-MR]

    Action: Settlement Agreement signed July 25, 2001. Without 
admitting fault or liability, Marketplace Home Mortgage, LLC (``MHM'') 
agreed to a civil money penalty of $20,000. In addition, MHM agreed to 
indemnify HUD for any losses incurred on 4 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: MHM allowed a non-FHA approved 
entity to originate 6 HUD/FHA loans that were registered with the 
Department as loans originated by MHM; and MHM failed to file annual 
loan origination reports for 1996-1997, which supplements the 
requirements of the Home Mortgage Disclosure Act.

26. Megamerica Mortgage Group, Inc., San Antonio, TX

[Docket No. 00-1319-MR]

    Action: Settlement Agreement signed May 3, 2001. Without admitting 
fault or liability, Megamerica Mortgage Group, Inc. (``Megamerica'') 
agreed to indemnify HUD for any losses incurred on 5 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Megamerica recruited non-HUD 
approved entities and allowed non-Megamerica employees to originate 
loans which Megamerica processed and submitted to be approved for FHA 
insurance; Megamerica allowed prohibited branch arrangements; 
Megamerica signed false Lender Certifications contained in addenda to 
the Uniform Residential Loan Applications; Megamerica made prohibited 
payments to entities that both prepared loan applications and received 
real estate commissions on the same FHA loan transactions; Megamerica 
failed to disclose payments to brokers on the HUD-1 Settlement 
Statements; and Megamerica failed to maintain complete loan files for a 
minimum period of two years from the date of insurance endorsement.

27. Mission Hills Mortgage Corporation, Santa Ana, CA

[Docket No. 00-1350-MR]

    Action: Settlement Agreement signed July 25, 2001. Without 
admitting fault or liability, Mission Hills Mortgage Corporation 
(``MHMC'') agreed to a civil money penalty of $60,000. In addition, 
MHMC agreed to indemnify HUD for any losses incurred on 15 loans. 
Further, MHMC agreed to audit its FHA/HUD loan files for a specific 
time period and refund any unallowable fees to mortgagors.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: MHMC failed to maintain and 
implement a quality control plan in compliance with HUD requirements; 
MHMC provided false information in originating and obtaining HUD/FHA 
mortgage insurance in one loan; MHMC failed to properly verify the 
source and adequacy of funds for the down-payment and/or closing; MHMC 
failed to properly verify credit history; MHMC failed to provide 
acceptable compensating factors for high ratios; MHMC failed to 
evaluate properly effective income; MHMC charged unallowable fees; MHMC 
failed to resolve discrepancies; MHMC failed to include liabilities in 
one loan; and MHMC failed to maintain complete origination files.

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

[Docket No. 01-1544-MR]

    Action: Settlement Agreement signed September 18, 2001. Without 
admitting fault or liability, Molton, Allen & Williams Corporation 
(``MAWC'') agreed to indemnify HUD for any losses incurred on 2 loans.
    Cause: HUD's Departmental Enforcement Center made the following 
finding of violations of HUD/FHA requirements resulting from a Quality 
Assurance Division review of Colonial Atlantic Mortgage, a loan 
correspondent that MAWC sponsored: MAWC failed to properly verify the 
source and adequacy of funds for the down payment or income 
requirements in two loans.

29. Money Line Classic Corporation, Whittier CA

[Docket No. 01-1398-MR]

    Action: In a letter dated July 26, 2001, the Board voted to impose 
a civil money

[[Page 63722]]

penalty on Money Line Classic Corporation (``MLCC'') of $45,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: MLCC failed to maintain and 
implement a Quality Control Plan in compliance with HUD requirements; 
MLCC failed to notify the Department of program abuses; MLCC failed to 
designate a senior corporate officer to conduct exclusively the affairs 
of MLCC during normal business hours; MLCC failed to provide office 
space that is clearly identified to the public; and MLCC failed to 
retain complete origination files.

30. Mortgage Loan Specialists, Inc., Solana Beach, CA

[Docket No. 01-1429-MR]

    Action: Settlement Agreement signed July 18, 2001. Without 
admitting fault or liability, Mortgage Loan Specialists, Inc. (``MLS'') 
agreed to a civil money penalty of $192,500.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: MLS allowed prohibited branch 
arrangements or net branches; MLS failed to file annual loan 
origination reports for 1997-1999, which supplements the requirements 
of the Home Mortgage Disclosure Act; and MLS failed to maintain and 
implement a Quality Control Plan.

31. MortgageOne Financial Services, Kissimmee, FL

[Docket No. 01-1472-MR]

    Action: Settlement Agreement signed May 21, 2001. Without admitting 
fault or liability, MortgageOne Financial Services (``MOFS'') agreed to 
a civil money penalty of $10,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: MOFS failed to implement a 
Quality Control Plan in compliance with HUD/FHA requirements; MOFS 
failed to assure that interested third parties did not participate in 
the origination and/or processing of loans to be insured by the 
Department; and MOFS falsely certified loan documents to obtain HUD/FHA 
insurance.

32. Mortgage One, Inc., Minneapolis, MN

[Docket No. 00-1343-MR]

    Action: Settlement Agreement signed July 25, 2001. Without 
admitting fault or liability, Mortgage One, Inc. (``MOI'') agreed to a 
civil money penalty of $15,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: MOI failed to maintain and 
implement a Quality Control Plan; MOI failed to file annual loan 
origination reports for 1996-1998, which supplements the requirements 
of the Home Mortgage Disclosure Act; MOI failed to conduct face-to-face 
interviews with four first time home buyers; MOI allowed non-MOI 
employees in six cases to take loan applications and process paperwork 
on HUD/FHA insured mortgages; and MOI used false information in 
originating seven loans and obtaining HUD/FHA mortgage insurance.

33. Norwest Mortgage, Inc., Des Moines, IA

[Docket No. 99-1038-MR]

    Action: Settlement Agreement signed May 3, 2001. Without admitting 
fault or liability, Norwest Mortgage, Inc., now known as Wells Fargo 
Home Mortgage, Inc., (``Norwest'') agreed to a civil money penalty of 
$75,000. Norwest also agreed to indemnify HUD for any losses incurred, 
including interest, from Norwest's submission of insurance claims on 39 
loans that were subject to a 1996 settlement agreement. [For the prior 
Federal Register notice on the proposed settlement agreement, see 65 FR 
at 53736, September 5, 2000.]
    Cause: Contrary to the terms of a March 22, 1996 Settlement 
Agreement, Norwest submitted claims for FHA insurance on 39 loans on 
which Norwest had agreed to not submit such claims.

34. PMA Mortgage, Inc., Long Beach, CA

[Docket No. 01-1485-MR]

    Action: In a letter dated August 14, 2001, the Board withdrew PMA 
Mortgage, Inc.''s (``PMA'') HUD/FHA approval for three years.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: PMA failed to maintain and 
implement a quality control plan in compliance with HUD requirements; 
PMA used falsified documentation and/or conflicting information in 
originating loans and obtaining HUD/FHA mortgage insurance; PMA failed 
to properly verify the source and adequacy of funds for the down 
payment and/or closing costs; PMA failed to identify sales within the 
last 12 months on appraisals; and PMA requested a seller to backdate 
loan documents.

35. RBMG, Inc., Columbia SC

[Docket No. 01-1545-MR]

    Action: Settlement Agreement signed September 25, 2001. Without 
admitting fault or liability, RBMG agreed to indemnify HUD for any 
losses incurred on six loans.
    Cause: HUD's Quality Assurance Division made the following finding 
of violations of HUD/FHA requirements: RBMG failed to properly verify 
the source and adequacy of funds for the down payment or income 
requirements in six loans.

36. Twins, Inc., Columbia, SC

[Docket No. 00-1076-MR]

    Action: Settlement Agreement signed May 21, 2001. Without admitting 
fault or liability, Twins, Inc. (``TI'') agreed to a civil money 
penalty of $8,000. In addition, the Department reinstated TI as an FHA 
approved mortgagee. The Board had previously withdrawn TI's HUD/FHA 
approval for three years in a letter dated September 29, 2000. [For the 
prior Federal Register notice on the proposed settlement agreement, see 
65 FR at 53737, September 5, 2000.]
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: TI shared office space with its 
parent company and maintained an office not clearly identified to the 
public; TI commingled employees with its parent company; TI used more 
than one entity to conduct its loan origination function; TI failed to 
maintain an adequate Quality Control Plan for the origination of HUD/
FHA insured mortgages; TI failed to properly implement its Quality 
Control Plan; and TI charged mortgagors unallowable fees.

37. U.S. Lending Corporation, Long Beach, CA

[Docket No. 01-1537-MR]

    Action: In a letter dated July 26, 2001, the Board withdrew U.S. 
Lending Corporation's (``USLC'') HUD/FHA approval for five years. In 
addition, the Board voted to impose a civil money penalty of $35,000.
    Cause: While preparing for an administrative hearing against 
Milestone Mortgage Corporation, HUD's Mortgagee Review Board staff 
learned that Milestone, despite its immediate withdrawal from FHA 
programs was operating under the name of U.S. Lending Corporation and 
was still originating FHA insured loans. The Board voted to immediately 
withdraw USLC's approval based on the following violations of HUD/FHA 
requirements: USLC circumvented the Mortgagee Review Board's withdrawal 
action against Milestone Mortgage Corporation; USLC failed to exclude 
participants that are suspended from participating in federal 
government programs; USLC

[[Page 63723]]

used non FHA approved offices to originate FHA insured mortgages; USLC 
failed to maintain complete origination files; USLC failed to maintain 
an office space that was separate and apart from that of another 
entity; USLC failed to meet the staffing requirement of at least two 
full-time employees at a main office; USLC failed to follow proper 
quality control procedures; and USLC failed to establish and maintain 
an adequate Quality Control Plan for the origination of HUD/FHA insured 
mortgages. [For the prior Federal Register notice relating to Milestone 
Mortgage Corporation, see 66 FR at page 38307, July 23, 2001.]

38. Valley Mortgage Company, Inc., McAllen, TX

[Docket No. 01-1411-MR]

    Action: Settlement Agreement signed August 28, 2001. Without 
admitting fault or liability, Valley Mortgage Company, Inc., (``VMCI'') 
agreed to a civil money penalty of $25,000. VMCI also agreed to 
indemnify HUD for any losses incurred on 11 loans. At the time of 
settlement, VMCI paid HUD an additional $77,604.22 for losses incurred 
on three loans upon which HUD had paid claims and had sold the 
property.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: VMCI failed to verify the source 
of funds for closing and/or to pay off debts; VMCI used inaccurate and/
or unstable income to qualify mortgagors; VMCI omitted mortgagor 
liabilities and/or the liabilities of the non-purchasing spouse in one 
loan qualification; VMCI failed to adequately document mortgagors' 
credit histories in one loan; VMCI failed to update credit documents in 
excess of 120 days at the time of closing; VMCI failed to clarify or 
document important file discrepancies in one loan; VMCI closed a loan 
in excess of the maximum allowable resulting in an over-insured 
mortgage; and VMCI failed to perform sufficient investigation and 
analysis to certify that a condominium project satisfied the 
eligibility criteria for a ``spot loan'.

39. West Coast Mortgage Securities, Inc., San Diego, CA

[Docket No. 00-1130-MR]

    Action: Settlement Agreement signed August 28, 2001. Without 
admitting fault or liability, West Coast Mortgage Securities, Inc., 
(``WCMS'') 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: WCMS failed to file annual loan 
origination reports for 1995-1999, which supplements the requirements 
of the Home Mortgage Disclosure Act; and WCMS failed to properly 
document liabilities.

    Dated: December 3, 2001.
John C. Weicher,
Assistant Secretary for Housing--FHA, Commissioner, Chairman, Mortgagee 
Review Board.
[FR Doc. 01-30438 Filed 12-7-01; 8:45 am]
BILLING CODE 4210-27-P