[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]
-----------------------------------------------------------------------
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.
-----------------------------------------------------------------------
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