[Federal Register Volume 67, Number 60 (Thursday, March 28, 2002)]
[Notices]
[Pages 14957-14959]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-7389]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4558-N-09]


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 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 Seventh 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 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 given of administrative 
actions that have been taken by the Mortgagee Review Board from October 
1, 2001 through December 31, 2001.

1. Ambassador Mortgage Corporation, Turnersville, NJ

[Docket No. 99-985-MR]

    Action: In a letter dated December 10, 2001, the Board proposed the 
withdrawal of Ambassador Mortgage Corporation's (``AMC'') HUD/FHA 
approval for three years.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: AMC employed loan officers who 
were not exclusive employees; AMC failed to provide complete loan 
origination files for review; and AMC failed to implement and maintain 
a Quality Control Plan.

2. Capital Mortgage Services/Siwell, Inc., Lubbock, TX

[Docket No. 01-1540-MR]

    Action: Settlement Agreement signed December 4, 2001. Without 
admitting fault or liability, Capital Mortgage Services/Siwell, Inc. 
(``CMS'') agreed to a payment of $1,000.
    Cause: HUD received a complaint from an FHA mortgagor which 
revealed the following violations of HUD/FHA requirements: CMS failed 
to comply with HUD/FHA's Loss Mitigation policies and failed to provide 
appropriate loan servicing using required loss mitigation tools; and 
CMS terminated FHA Mortgage Insurance without the mortgagor's approval.

3. CBSK Financial Group, Inc., Santa Ana, CA

[Docket No. 01-1488-MR]

    Action: Settlement Agreement signed November 6, 2001. Without 
admitting fault or liability, CBSK Financial Group, Inc. (``CBSK'') 
agreed to a payment of $500,000. In addition, CBSK refunded unallowable 
fees to 18 mortgagors.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: CBSK operated branch offices in 
Oklahoma and Utah under prohibited branch arrangements; CBSK failed to 
implement adequate branch office quality control procedures; CBSK 
failed to ensure unallowable fees were not charged to mortgagors; and 
CBSK failed to retain complete loan origination files.

[[Page 14958]]

4. Chase Mortgage Company--West, f/k/a Mellon Mortgage Company, 
Houston, TX

[Docket No. 01-1433-MR]

    Action: Settlement Agreement signed October 16, 2001. Without 
admitting fault or liability, Chase Mortgage Company--West, f/k/a 
Mellon Mortgage Company, (``CMCW'') agreed to a payment of $236,500. 
CMCW also agreed to indemnify HUD for any losses incurred on 35 loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Mellon Mortgage Company 
(``MMC'') failed to comply with HUD's Loss Mitigation policies and 
procedures; MMC failed to maintain a current and accurate Quality 
Control Plan and to properly implement the plan; and MMC failed to 
properly report under HUD's Single Family Default Monitoring System 
(SFDMS).

5. Continental Capital Corporation, Huntington Station, NY

[Docket No. 01-1588-MR]

    Action: By memorandum dated November 8, 2001, the Board referred 
for Administrative Offset losses that HUD incurred on a loan originated 
by Continental Capital Corporation (``CCC'') that was subject to a 1997 
settlement agreement for indemnification.
    Cause: CCC failed to comply with the terms of an Indemnification 
Agreement with the Mortgagee Review Board.

6. Foundation Funding Group, Inc., d/b/a Greatstone Mortgage, 
Tampa, FL

[Docket No. 01-1583-MR]

    Action: In a letter dated November 28, 2001, the Board permanently 
withdrew Foundation Funding Group, Inc.'s (d/b/a Greatstone Mortgage, 
``FFGI'') HUD/FHA approval.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: FFGI allowed improper charges to 
be financed into new mortgages; FFGI improperly allowed co-borrowers to 
be removed from the mortgage note; FFGI refinanced fixed rate mortgages 
into adjustable rate mortgages in a manner that violated HUD/FHA 
requirements; FFGI provided improper cash-out on streamline refinanced 
loans; and FFGI failed to have a Quality Control Plan that complied 
with HUD/FHA requirements.

7. GHI Corporation, d/b/a U.S. Capital Mortgage, Miami, FL

[Docket No. 00-1360-MR]

    Action: Settlement Agreement signed December 18, 2001. Without 
admitting fault or liability, GHI Corporation, d/b/a U.S. Capital 
Mortgage (``GHI'') 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: GHI failed to file an annual 
loan origination report for 1998, which supplements the requirements of 
the Home Mortgage Disclosure Act; GHI failed to establish, maintain, 
and implement a Quality Control Plan in compliance with HUD/FHA 
requirements; GHI allowed interested third parties to participate in 
the origination of two HUD/FHA insured loans; and GHI failed to 
maintain complete loan origination files for three loans.

8. Heartland Mortgage, Inc., Tucson, AZ

[Docket No. 00-1105-MR]

    Action: Settlement Agreement signed December 18, 2001. Without 
admitting fault or liability, Heartland Mortgage, Inc. (``HMI'') agreed 
to a civil money penalty of $5,000. [This settlement agreement resolves 
the civil money penalty matter previously voted on by the Board. It 
does not change HUD's withdrawal of Heartland's HUD/FHA approval for 
three years, as noted in 66 FR at 38305 (July 23, 2001).]
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: HMI failed to implement a 
Quality Control Plan; HMI failed to file annual loan origination 
reports for 1997 and 1998 which supplements the requirements of the 
Home Mortgage Disclosure Act; HMI employed two loan officers who were 
also real estate agents/brokers; HMI failed to properly document gift 
letters in two loans; HMI failed to properly document liabilities in 
one loan; and HMI failed to maintain complete loan origination files in 
7 loans.

9. Legacy Mortgage, Provo, Utah

[Docket No. 01-1469-MR]

    Action: In a letter dated December 5, 2001, the Board proposed the 
withdrawal of Legacy Mortgage's (``Legacy'') HUD/FHA approval for three 
years. In addition, the Board voted to impose a civil money penalty of 
$55,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: Legacy failed to remit Up-Front 
Mortgage Insurance Premiums to HUD/FHA within 15 days of closing for 
173 loans and failed to segregate escrow funds from operational funds; 
Legacy failed to submit loans for endorsement within 60 days after loan 
closing for 146 loans; Legacy failed to properly verify the source and 
adequacy of funds for the downpayment and/or closing costs for five 
loans; Legacy failed to properly verify and analyze income in two 
loans; Legacy failed to ensure property eligibility for HUD/FHA 
mortgage insurance in four loans; Legacy failed to properly qualify the 
mortgagors in three loans; and Legacy failed to recognize and adjust 
for ``inducements to purchase'' in two loans.

10. Litton Loan Servicing, LP, Houston, TX

[Docket No. 01-1490-MR]

    Action: Settlement Agreement signed December 4, 2001. Without 
admitting fault or liability, Litton Loan Servicing, LP, (``LLSI'') 
agreed to a payment of $35,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: LLSI failed to perform or to 
document appropriate loan servicing activities; and LLSI failed to 
consider loss mitigation alternatives when loans were in default or 
prior to initiating foreclosure.

11. McSwain Mortgage Company, f/k/a HomeLink Mortgage Company, LLC, 
Memphis, TN

[Docket No. 01-1422-MR]

    Action: In a letter dated November 28, 2001, the Board proposed the 
withdrawal of McSwain Mortgage Company's (f/k/a HomeLink Mortgage 
Company, ``HLM'') HUD/FHA approval for three years. In addition, the 
Board voted to impose a civil money penalty of $36,000.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: HLM violated the Department's 
conflict of interest prohibited payments provisions; HLM failed to 
establish, maintain and implement a Quality Control Plan for the 
origination of FHA insured mortgages; and HLM failed to be clearly 
identified to the general public.

12. Northstar Mortgage Corporation, Dallas, TX

[Docket No. 00-1346-MR]

    Action: Settlement Agreement signed December 12, 2001. Without 
admitting fault or liability, Northstar Mortgage Corporation, 
(``NSMC'') agreed to a civil

[[Page 14959]]

money penalty of $13,000. NSMC also agreed to indemnify HUD for any 
losses incurred on two loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: NSMC approved loan applications 
originated and processed by personnel not employed by NSCM or Capitol 
State Mortgage Corporation, its loan correspondent; NSMC failed to 
accurately calculate the mortgagor's income and to justify the income 
used on one loan; NSMC failed to verify or adequately document the 
source of funds required for closing on two loans.

13. Platinum Capital Group, Inc., Manhattan Beach, CA

[Docket No. 00-1352-MR]

    Action: Settlement Agreement signed December 28, 2001. Without 
admitting fault or liability, Platinum Capital Group, Inc., (``PCG'') 
agreed to a civil money penalty of $21,500. PCG also agreed to 
indemnify HUD for any losses incurred on two loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: PCG failed to maintain and 
implement a quality control plan in compliance with HUD requirements; 
PCG failed to engage in business practices that conform to generally 
accepted practices of prudent mortgagees; PCG employed loan officers 
that were not exclusive employees of PCG; PCG failed to ensure that 
gift letters contained all required information; and PCG failed to 
ensure compliance with HUD/FHA's ban on loans to private investors.

14. Traditional Bankers Mortgage Corporation, Ponce, PR

[Docket No. 00-1321-MR]

    Action: Settlement Agreement signed December 28, 2001. Without 
admitting fault or liability, Traditional Bankers Mortgage Corporation, 
(``TBMC'') agreed to a civil money penalty of $40,000. TBMC also agreed 
to indemnify HUD for any losses incurred on nine loans.
    Cause: HUD's Quality Assurance Division made the following findings 
of violations of HUD/FHA requirements: TBMC allowed lenders not 
approved by HUD/FHA to participate in the origination and processing of 
loans insured by the Department; TBMC allowed non-employees to 
participate in the origination of loans insured by HUD/FHA; TBMC failed 
to resolve conflicting information regarding a borrower's employment; 
TBMC failed to properly verify the borrower's source of funds for down 
payment and/or closing costs; TBMC failed to properly verify the 
borrowers' effective income; TBMC failed to properly address 
conflicting and/or derogatory credit information; TBMC failed to 
resolve inconsistencies on the property appraisal reports; TBMC 
submitted an unacceptable loan for FHA insurance; TBMC failed to be 
clearly identified to the general public; and TBMC failed to establish, 
maintain, and implement a Quality Control Plan for the origination of 
HUD/FHA insured mortgages.

    Dated: March 20, 2002.
John C. Weicher,
Assistant Secretary for Housing--Federal Housing Commissioner, 
Chairman, Mortgagee Review Board.
[FR Doc. 02-7389 Filed 3-27-02; 8:45 am]
BILLING CODE 4210-27-P