[Federal Register Volume 68, Number 34 (Thursday, February 20, 2003)]
[Notices]
[Pages 8302-8303]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-4037]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4558-N-11]


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 accordance with section 202(c) of the National Housing Act, 
this document provides notice 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 (Pub. L. 101-235, approved December 15, 
1989), requires that HUD ``publish a description of and the cause for 
administrative action against a HUD-approved mortgagee'' by HUD's 
Mortgagee Review Board. In accordance with the requirements of section 
202(c)(5), notice is given of administrative actions that have been 
taken by the Mortgagee Review Board from January 1, 2002, through March 
31, 2002.

1. Allied Financial Services, Inc., Birmingham, AL

[Docket No. 00-1344-MR]

    Action: In a letter dated December 13, 2000, the Board withdrew 
HUD's approval, specifically, the approval of the Federal Housing 
Administration (HUD/FHA), of Allied Financial Services, Inc.'s (AFS) 
approval for three years. The Board also voted to impose a civil money 
penalty.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements: AFS failed to file annual loan origination 
reports for 1997-1999, which supplements the requirements of the Home 
Mortgage Disclosure Act; AFS used false documentation to originate a 
HUD/FHA loan; AFS failed to ensure that only AFS employees process HUD/
FHA loans; AFS employed a loan officer who was not an exclusive 
employee; and AFS failed to provide complete loan origination files 
and/or documents for review.

2. Custom Mortgage Corporation, San Antonio, TX

[Docket No. 01-1543-MR]

    Action: Settlement Agreement signed January 11, 2002. Without 
admitting fault or liability, Custom Mortgage Corporation (CMC) agreed 
to pay a civil money penalty.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements: CMC failed to maintain and implement a Quality 
Control Plan in compliance with HUD/FHA requirements; CMC accepted 
eleven loans originated by personnel not employed by CMC; and CMC paid 
fees and compensation to unauthorized individuals in connection with 
nine loans.

3. Fidelity Mortgage & Funding Co., Memphis, TN

[Docket No. 01-1415-MR]

    Action: In a letter dated February 12, 2002, the Board withdrew the 
HUD/FHA approval of Fidelity Mortgage & Funding Co. (Fidelity) approval 
for five years. In addition, the Board voted to impose a civil money 
penalty.
    Cause: The Board took these actions based on the following findings 
of violations of HUD/FHA requirements: In 106 loans, Fidelity allowed 
non-employees to participate in the origination of loans to be insured 
by HUD/FHA; and Fidelity failed to develop, maintain, and implement a 
Quality Control Plan that meets HUD guidelines.

4. First Mortgage of Indiana, Inc., Indianapolis, IN

[Docket No. 99-1031-MR]

    Action: Settlement Agreement signed January 30, 2002. Without 
admitting fault or liability, First Mortgage of Indiana, Inc. (FMI) 
agreed to pay a civil money penalty.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements: FMI failed to maintain and implement a Quality 
Control Plan in compliance with HUD/FHA requirements; and FMI charged 
certain fees which were not allowed; and FMI used a rubber stamp to 
sign the Lender's Certification on page four of HUD Form 92900-A prior 
to closing.

5. Golden Empire Mortgage, Inc., Bakersfield, CA [Docket No. 98-853-MR]

    Action: Settlement Agreement was signed March 26, 2002. Without

[[Page 8303]]

admitting fault or liability, Golden Empire Mortgage, Inc. (GEM) agreed 
to pay a civil money penalty. In addition, GEM agreed to indemnify HUD 
for any losses incurred on 12 loans.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements: GEM failed to notify HUD of violations which 
were discovered by GEM's own quality control review; GEM failed to 
notify HUD that certain fraudulent documents were discovered during 
GEM's quality control review; GEM permitted straw buyers to qualify for 
HUD/FHA insured mortgages; GEM failed to require that all borrowers 
meet their required investment; GEM failed to correctly calculate the 
borrower's income in certain loans; and GEM failed to require that all 
repairs and/or valuation conditions were satisfied.

6. Jack Johnson and Associates, Inc., d/b/a Home Equity Mortgage, 
Riverside, CA

[Docket No. 00-1348-MR]

    Action: Settlement Agreement signed February 7, 2002. The Board 
withdrew the HUD/FHA approval of JJAI for a period of five years. 
Without admitting fault or liability, Jack Johnson and Associates, Inc. 
(JJAI), doing business as (d/b/a) Home Equity Mortgage agreed to pay a 
civil money penalty.
    Cause: The Board took this action based the following violations of 
HUD/FHA requirements: JJAI failed to file annual loan origination 
reports for 1992-1999, which supplements the requirements of the Home 
Mortgage Disclosure Act; JJAI failed to maintain and implement a 
quality control plan in compliance with HUD requirements; JJAI 
permitted an investor to circumvent the restrictions on FHA insured 
loans to investors; JJAI permitted false information to be used in 
originating loans and obtaining HUD/FHA mortgage insurance; and JJAI 
allowed non-employees to take loan applications for three FHA-insured 
loans.

7. Pac West Financial Corporation, Ontario, CA

[Docket No. 01-1406-MR]

    Action: Settlement Agreement signed January 11, 2002. Without 
admitting fault or liability, Pac West Financial Corporation (PWF) 
agreed to pay a civil money penalty. In addition, PWF agreed to 
indemnify HUD for any losses incurred on eight loans.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements: PWF failed to maintain and implement a Quality 
Control Plan in compliance with HUD requirements; PWF failed to file 
annual reports regarding loan activity; PWF used falsified 
documentation and/or conflicting information in originating 8 loans and 
obtaining HUD/FHA mortgage insurance; PWF allowed mortgagors to sign 
loan documents in blank form in two cases; and PWF failed to ensure 
that gift letters met HUD requirements in 18 loans.

8. Ron Simpson & Associates d/b/a Rockwell Mortgage Company, Farmington 
Hills, MI

[Docket No. 011497-MR]

    Action: Settlement Agreement signed March 7, 2002. Without 
admitting fault or liability, Ron Simpson & Associates, d/b/a Rockwell 
Mortgage Company (RMC), agreed to pay a civil money penalty.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements: RMC employed loan officers who were not 
exclusive employees; RMC failed to implement and maintain a Quality 
Control Plan in complete conformity with HUD/FHA requirements; RMC 
failed to maintain complete origination files and; RMC charged 
borrowers fees not permitted by HUD.

9. Southern Mortgage Investment Corporation, Winter Park, FL

[Docket No. 01-1480-MR]

    Action: In a letter dated May 8, 2002, the Board withdrew the HUD/
FHA approval of Southern Mortgage Investment Corporation (SMIC) 
approval for three years. In addition, they agreed to pay a civil money 
penalty.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements: SMIC failed to establish and maintain a 
Quality Control Plan for the origination of HUD/FHA insured mortgages; 
SMIC allowed the handling of loan documents by an interested third 
party; and SMIC failed to maintain complete loan files.

10. Underline, Inc., d/b/a Advantage Mortgage Services, Santa Ana, CA

[Docket No. 01-1604-MR]

    Action: Settlement Agreement was signed on March 20, 2002. Without 
admitting fault or liability, Underline, Inc.(UI) d/b/a/ Advantage 
Mortgage Services agreed to pay a civil money penalty.
    Cause: The Board took this action based on the following violations 
of HUD requirements: UI allowed non-employees to originate HUD/FHA 
insured loans, and UI failed to implement a Quality Control Plan in 
compliance with HUD requirements by allowing non-employees to originate 
HUD/FHA insured loans.

11. Utah Mortgage Loan Corporation, Midvale, UT

[Docket No. 00-1342-MR]

    Action: Settlement Agreement letter was signed February 9, 2002. 
Without admitting fault or liability, Utah Mortgage Loan Corporation 
(UMLC) agreed to pay a civil money penalty.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements: UMLC failed to maintain and implement a 
Quality Control Plan in compliance with HUD requirements; UMLC 
permitted non-UMLC employees to originate FHA loan applications; UMLC 
failed to pay the operating expenses of an employee; UMLC paid 
unallowable fees/compensation in connection with HUD/FHA insured 
mortgages to non-employees; UMLC paid origination commissions to UMLC 
Direct Endorsement Underwriter who also performed the Quality Control 
Audits on HUD/FHA loans; and UMLC leased office space to another entity 
that was not physically separate and apart from UMLC.

    Dated: February 6, 2003.
John C. Weicher,
Assistant Secretary for Housing-Federal Housing Commissioner, Chairman, 
Mortgagee Review Board.
[FR Doc. 03-4037 Filed 2-19-03; 8:45 am]
BILLING CODE 4210-27-P