[Federal Register Volume 69, Number 40 (Monday, March 1, 2004)]
[Notices]
[Pages 9633-9638]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-4418]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4914-N-02]
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,
this notice advises 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-
8000, telephone: (202) 708-3041 extension 3574 (this is not a toll-free
number). Hearing- or speech-impaired individuals may access this
telephone number through TTY by calling the toll-free Federal
Information Relay Information Service at 1-800-877-8339.
SUPPLEMENTARY INFORMATION: Section 202(c)(5) of the National Housing
Act (12 U.S.C. 1708(c)(5) 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 compliance with the
requirements of section 202(c)(5), this notice advises of
administrative actions that have been taken by the Mortgagee Review
Board (Board) from December 2001 through September 2003.
1. Acclaim Mortgage Incorporated, Denver, CO [Docket No. 02-1959-MR]
Action: Settlement Agreement signed on May 29, 2003. Without
admitting fault or liability, Acclaim Mortgage Incorporated (AMI)
agreed to pay a civil money penalty in the amount of $44,900.
Cause: The Board took this action based on the following violations
of the HUD's Federal Housing Administration (FHA) requirements in the
origination of HUD/FHA-insured loans where AMI: failed to perform
Quality Control reviews in compliance with HUD/FHA requirements; failed
to file annual reports regarding loan application activity as required
by HUD/FHA requirements; and failed to pay all of its own operating
expenses in compliance with HUD/FHA requirements.
2. Allied Home Mortgage Capital Corporation, Houston, TX [Docket No.
01-1465-MR]
Action: Settlement Agreement signed on August 13, 2003. Without
admitting fault or liability, Allied Home Mortgage Capital Corporation
(AMCC) agreed to pay an administrative payment in the amount of
$50,000.
Cause: The Board took this action based on the following violations
of the HUD/FHA requirements in the origination of HUD/FHA-insured loans
where AMCC: engaged in improper branch operations because the
employment agreements violated HUD/FHA requirements; allowed a loan
officer to originate a HUD/FHA-insured loan in which the person was
both the loan officer and real estate agent; and allowed the
origination of HUD/FHA loans to occur in an office space that was not
clearly identified as an office of AHMCC.
3. Atlantic Coast Mortgage Services, Pleasantville, NJ [Docket No. 02-
1913-MR]
Action: Settlement Agreement signed on March 21, 2003. Without
admitting fault or liability, Atlantic Coast Mortgage Services (ACMS)
agreed to pay a civil money penalty in the amount of $100,000, and
indemnify HUD on 13 FHA-insured loans.
Cause: The Board took this action based on the following violation
of HUD/FHA requirements in the origination of HUD/FHA insured loans
where ACMS failed to obtain and properly analyze necessary documents to
determine the financial capacity of a nonprofit borrower.
4. BancFirst Corporation, Oklahoma City, OK [Docket No. 02-2152-MR]
Action: Settlement Agreement signed on March 24, 2003. Without
admitting fault or liability, BancFirst Corporation (BFC) agreed to pay
an administrative payment in the amount of $9,000.
Cause: The Board took this action based as a result of BFC's
failure to perform property inspections on HUD/FHA-insured multifamily
projects.
5. Bank of New York, New York, NY [Docket No. 02-1963-MR]
Action: Settlement Agreement signed on January 31, 2003. Without
admitting fault or liability, Bank of New York (BNY) agreed to pay an
administrative payment in the amount of $36,000.
Cause: The Board took this action as a result of BNY's failure to
perform property inspections on HUD/FHA-insured multifamily projects.
6. District of Columbia Housing Finance Agency, Washington, DC [Docket
No. 03-3025-MR]
Action: Settlement Agreement signed on May 13, 2003. Without
admitting fault or liability, District of Columbia Housing Finance
Agency (DCHFA) agreed to pay an administrative payment in the amount of
$3,000.
Cause: The Board took this action as a result of DCHFA's failure to
perform a property inspection on one HUD/FHA-insured multifamily
project.
7. Empire Funding Corporation, Austin, TX [Docket No. 99-974-MR]
Action: Settlement Agreement signed on August 7, 2002. Without
admitting fault or liability, Empire Funding Corporation (EFC) agreed
to forever forfeit its HUD/FHA Title I approval and liquidate its
assets in accordance with a federal bankruptcy court approved
liquidation plan. HUD agreed not to pursue civil money penalties.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of FHA-insured Title I
property improvement loans where EFC: Failed to re-approve dealers in a
timely manner and funded Title I loans from non-approved dealers; and
failed to ensure that detailed descriptions of the
[[Page 9634]]
proposed improvements were provided to the borrowers.
8. Evans Mortgage Corporation, Edmond, OK [Docket No. 01-1565-MR]
Action: Settlement Agreement signed on June 11, 2002. Without
admitting fault or liability, Evans Mortgage Corporation (EMC) agreed
to pay a civil money penalty in the amount of $10,000 and refund
excessive fees charged to mortgagors.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA insured loans
where EMC: Failed to file annual reports regarding loan application
activity as required by HUD/FHA requirements; failed to maintain and
implement a Quality Control Plan in compliance with HUD requirements;
allowed non-FHA approved entities to originate loans that were
registered with HUD as though they had been originated by EMC
employees; paid referral fees to non-employees; signed false lender
certifications contained in the addenda to the Uniform Residential Loan
Application; and charged unallowable and/or excessive fees to FHA
borrowers not specifically permitted by HUD/FHA.
9. Federal National Mortgage Association, Washington, DC [Docket No.
03-3026-MR]
Action: Settlement Agreement signed on May 8, 2003. Without
admitting fault or liability, Federal National Mortgage Association
(FNMA) agreed to pay an administrative payment in the amount of $6,000.
Cause: The Board took this action as a result of FNMA's failure to
perform property inspections on HUD/FHA-insured multifamily projects.
10. Fidelity Bank and Trust Company, Baton Rouge, LA [Docket No. 01-
1580-MR]
Action: On June 25, 2002, the Board issued a letter to Fidelity
Bank and Trust Company (FBTC) withdrawing its HUD/FHA-approval and
imposing a civil money penalty in the amount of $93,500.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA insured loans
where FBTC: Failed to adopt, maintain and implement a quality control
plan in compliance with HUD requirements; failed to adequately verify
the source and sufficiency of funds used for the down payment, loan
closing, or to satisfy loan approval conditions; failed to properly
verify and/or calculate the mortgagor's income used for qualifying
purposes; failed to include all of the borrower's debts when
calculating the total fixed payment-to-income qualifying ratios; failed
to ensure that a mortgagor met a minimum required investment because
the loan exceeded the maximum mortgage amount; failed to resolve
discrepancies in documentation used to process, underwrite and approve
HUD/FHA loans; failed to satisfy requirements established by the Direct
Endorsement underwriter prior to closing; failed to verify the
borrower's stability of income or employment for the recent two full
years; approved borrowers with delinquent and/or poor credit histories;
and charged fees to HUD/FHA borrowers that were not specifically
permitted by HUD/FHA.
11. Financial Mortgage Corporation, Fort Washington, PA [Docket No. 00-
1106-MR]
Action: Settlement Agreement signed on April 17, 2002. Without
admitting fault or liability, Financial Mortgage Corporation (FMC)
agreed to pay a civil money penalty in the amount of $1,000 and
indemnify HUD for one loan.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where FMC: Used falsified or conflicting documentation to approve a
HUD/FHA mortgagor, and failed to properly verify income to approve a
HUD/FHA mortgagor.
12. First Colony Mortgage Corporation, Orem, UT [Docket No. 01-1566-MR]
Action: Settlement Agreement signed on March 14, 2003. Without
admitting fault or liability, First Colony Mortgage Corporation (FCMC)
agreed to pay a civil money penalty in the amount of $49,500, indemnify
HUD on two FHA-insured loans, and buydown the over-insured amount in
one loan.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA insured loans
where FCMC: Accepted loans originated by personnel not employed or not
exclusively employed by FCMC; failed to properly verify the source and
adequacy of funds for the down payment and/or closing costs; failed to
properly verify and analyze income; failed to ensure property
eligibility for HUD/FHA mortgage insurance; and closed a loan in excess
of the maximum allowable insurance amount resulting in an over-insured
loan.
13. First Eastern Mortgage Corporation, Andover, MA [Docket No. 02-
1905-MR]
Action: Settlement Agreement signed on April 1, 2003. Without
admitting fault or liability, First Eastern Mortgage Corporation (FEMC)
agreed to pay an administrative payment in the amount of $171,000, and
indemnify HUD on 49 HUD/FHA-insured loans.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA insured loans
where FEMC: Failed to obtain and properly analyze necessary documents
to determine the financial capacity of a non-profit borrower; charged
borrowers fees not permitted by HUD/FHA; and failed to identify the
lender credits on the Good Faith Estimate and the HUD-1 Settlement
Statement.
14. First Nationwide Mortgage Corporation, Frederick, MD [Docket No.
02-2149-MR]
Action: Settlement Agreement signed on May 1, 2003. Without
admitting fault or liability, First Nationwide Mortgage Corporation
(FNMC) agreed to pay an administrative payment in the amount of
$12,000.
Cause: The Board took this action as a result of FNMC's failure to
perform property inspections on HUD/FHA-insured multifamily projects.
15. Firstrust Savings Bank, Philadelphia, PA [Docket No. 03-3086-MR]
Action: Settlement Agreement signed on June 30, 2003. Without
admitting fault or liability, Firstrust Savings Bank (FSB) agreed to
pay an administrative payment in the amount of $6,000.
Cause: The Board took this action as a result of FSB's failure to
perform property inspections on HUD/FHA-insured multifamily projects.
16. Flagstar Bank, F.S.B., Troy, MI [Docket No. 02-1948-MR]
Action: On March 7, 2003 the Board issued a letter of reprimand to
Flagstar Bank, F.S.B.
Cause: The Board took this action after a jury found that Flagstar
Bank had violated sections 805 and 818 of the Fair Housing Act (42
U.S.C. 3605 and 3617), and corresponding regulations promulgated by HUD
pertaining to mortgage lending, 24 CFR 100.120 to 100.130.
17. GMAC Mortgage Corporation, Horsham, PA [Docket No. 01-1596-MR]
Action: Settlement Agreement signed on April 28, 2003. Without
admitting fault or liability, GMAC Mortgage Corporation (GMACMC) agreed
to pay
[[Page 9635]]
an administrative payment in the amount of $91,000 and indemnify HUD on
26 HUD/FHA-insured loans.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA insured loans
where GMACMC: Failed to identify and/or resolve false or conflicting
documentation prior to approving HUD/FHA mortgagors; failed to ensure
that the mortgagor made the minimum required investment in the
property; failed to adequately verify the source of funds for
mortgagor's down payment and/or closing costs; failed to ensure that
verifications and other supporting documents did not pass through the
hands of an interested third party; failed to obtain and analyze the
terms and conditions of the real estate transaction and to consider the
acquisition cost of recently acquired properties in the underwriting of
the loans; failed to submit closed loans form endorsement within 60
days after loan closing as required; permitted an employee, who was
also a party to the transaction, to be involved in the loan processing;
failed to retain pertinent loan file documents; permitted cash back to
a mortgagor receiving a homebuyer's assistance grant; and failed to
properly evaluate effective income.
18. Highland Mortgage Company, Birmingham, AL [Docket No. 03-3089-MR]
Action: Settlement Agreement signed on June 30, 2003. Without
admitting fault or liability, Highland Mortgage Company (HMC) agreed to
pay an administrative payment in the amount of $12,000.
Cause: The Board took this action as a result of HMC's failure to
perform property inspections on HUD/FHA-insured multifamily projects.
19. Imperial Lenders Corporation, Miami, FL [Docket No. 01-1623-MR]
Action: Settlement Agreement signed on June 24, 2003. Without
admitting fault or liability, Imperial Lenders Corporation (ILC) agreed
to pay a civil money penalty in the amount of $18,000.
Cause: The Board took this action based on the following violations
of the HUD/FHA requirements where ILC: Failed to prevent individuals
who were not on the employee list to participate in the origination of
HUD/FHA insured loans by interviewing applicants; failed to establish,
maintain and implement a Quality Control Plan in compliance with HUD/
FHA requirements; failed to file annual reports regarding FHA loan
application activity for the years 1998 and 1999; failed to prevent a
senior corporate officer to actively work as a real estate broker; and
failed to separate its office space from another entity and clearly
identify itself to the public.
20. Infinity Mortgage Company, Murray, UT [Docket No. 01-1574-MR]
Action: Settlement Agreement signed on May 6, 2002. Without
admitting fault or liability, Infinity Mortgage Company (IMC) agreed to
pay a civil money penalty in the amount of $6,500.
Cause: The Board took this action based on the following violations
of the HUD/FHA requirements in the origination of HUD/FHA insured loans
where IMC: Failed to establish a proper loan correspondent/sponsor
relationship with a lender; failed to maintain and implement a quality
control plan; and, failed to file annual reports regarding FHA loan
application activity.
21. Investors Mortgage Funding Incorporated, Sacramento, CA [Docket No.
01-1486-MR]
Action: Settlement Agreement signed on April 17, 2002. Without
admitting fault or liability Investors Mortgage Funding Incorporated
(IMFI) agreed to a voluntary withdrawal of its HUD/FHA lender approval
and pay a civil money penalty in the amount of $40,000.
Cause: The Board took this action based on the following violations
of the HUD/FHA requirements in the origination of HUD/FHA insured loans
where IMFI: Failed to implement and maintain a quality control plan in
compliance with HUD requirements; failed to file annual reports
regarding loan application activity as required by HUD/FHA
requirements; permitted non-FHA approved branch offices to originate
and process HUD/FHA-insured loans; employed loan officers that were not
exclusive employees; and used non-employees to originate and process
HUD/FHA mortgage loans.
22. KB Home Mortgage Company, f/k/a Kaufman and Broad Mortgage Company,
Woodland Hills, CA [Docket No. 01-1594-MR]
Action: Settlement Agreement signed on January 30, 2003. Without
admitting fault or liability, KB Home Mortgage Company (KBMC) (fka
Kaufman and Broad Mortgage Company) agreed to pay an administrative
payment in the amount of $146,000, indemnify HUD on 15 HUD/FHA-insured
loans, and pay HUD for losses associated with HUD/FHA insurance claims.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where KBMC: Accepted fees for real estate settlement services when
either no or nominal services were provided; failed to properly verify
the source and adequacy of funds used for the down payment and/or
closing costs; failed to properly verify, analyze, and calculate income
used to qualify mortgagors; failed to properly consider and verify
liabilities of the mortgagor and/or non-purchasing spouse; failed to
properly document mortgagor's credit histories; failed to properly
document that judgments were paid-off or that the creditor was willing
to subordinate the judgments to the insured mortgages; failed to update
expired credit documents; and failed to provide compensating factors
for ratios exceeding HUD/FHA standards.
23. Kiddco Mortgage Company, Cincinnati, OH [Docket No. 01-1578-MR]
Action: On February 28, 2003, the Board issued a letter to Kiddco
Mortgage Company (KMC) withdrawing its HUD/FHA approval and imposing a
civil money penalty in the amount of $167,875.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA insured loans
where KMC: Falsified documentation or conflicting information to
originate and obtain mortgage insurance; failed to document the
borrower's source of funds used for downpayment or closing costs; used
faxed copies of documents to originate loans; failed to perform
satisfactory credit analysis; failed to ensure that mortgagors met
their minimum required investment; failed to ensure that the
requirements for high loan-to-value, new construction loans were met;
failed to remit Up-Front Mortgage Insurance Premiums to HUD within 15
days from the date of the loan closing; failed to file annual reports
regarding FHA loan application activity as required by HUD/FHA for 1995
through 2000; failed to ensure that an employee did not act as both
Loan Officer and Direct Endorsement Underwriter on HUD/FHA loans;
accepted loan applications from non-employees; failed to ensure that
their employees worked exclusively for the lender and did not maintain
other employment in the mortgage or real estate industry; failed to
ensure that loans involving employees of KMC were properly processed;
failed to ensure that loan verification documents did not pass through
the hands of an interested third party; failed to provide evidence that
all parties to the loan transactions
[[Page 9636]]
were checked against HUD's Limited Denial of Participation (LDP)
listing and the government-wide Government Services Administration
(GSA) Excluded Parties Listing System; failed to maintain fidelity bond
coverage and errors and omissions insurance; paid fees on behalf of
borrowers which ere not permitted by HUD/FHA; and failed to maintain
and implement a quality control plan in compliance with HUD/FHA
requirement.
24. Lend-Mor Capital Corporation, Garden City, NY [Docket No. 01-1361-
MR]
Action: Settlement Agreement signed on July 17, 2002. Without
admitting fault or liability, Lend-Mor Capital Corporation (LMCC)
agreed to pay a civil money penalty in the amount of $28,500 and
indemnify HUD on eight HUD/FHA-insured loans.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where LMCC: Failed to maintain and implement a Quality Control Plan in
compliance with HUD requirements; failed to verify documentation used
to qualify borrowers in compliance with HUD requirements; failed to
determine whether the borrower met minimum cash investment
requirements; failed to verify the source and adequacy of funds for the
downpayment and/or closing costs; did not provide adequate significant
compensating factors to justify the approval of the mortgage loan with
ratios exceeding FHA guidelines; and failed to explain irregularities
in the appraisal report.
25. Loan Correspondents Incorporated, d/b/a Capital Funding Group,
Costa Mesa, CA [Docket No. 00-1349-MR]
Action: Settlement Agreement signed on November 6, 2002. Without
admitting fault or liability, Loan Correspondents Incorporated (LCI),
d/b/a Capital Funding Group, agreed to pay a civil money penalty in the
amount of $24,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA insured loans
where LCI: failed to maintain and implement a Quality Control Plan in
accordance with HUD requirements; failed to file annual reports
regarding loan application activity in accordance with HUD
requirements; used falsified documentation and/or conflicting
information in originating HUD/FHA-insured loans; failed to adequately
document the source of funds used for the down payment and closing
costs; and failed to identify sales within 12 months on appraisals.
26. M & T Mortgage Corporation, Buffalo, NY [Docket No. 01-1602-MR]
Action: Settlement Agreement signed on July 17, 2002. Without
admitting fault or liability, M & T Mortgage Corporation (MTMC) agreed
to pay an administrative payment in the amount of $118,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA insured loans
where MTMC: Failed to obtain the required exhibits and/or execute
documents prior to disbursing funds from the 203(k) rehabilitation
escrow account; disbursed contingency funds to borrowers without the
required repair inspection; failed to take appropriate action when the
rehabilitation period expired and the borrowers failed to complete the
rehabilitation within the required time frame; and failed to arrange
for a final inspection on each of the loans that were being placed in
foreclosure.
27. Mortgage Amenities Corporation, Lincoln, RI [Docket No. 02-1906-MR]
Action: Settlement Agreement signed on July 24, 2003. Without
admitting fault or liability, Mortgage Amenities Corporation (MAC)
agreed to pay an administrative payment in the amount of $175,000, and
indemnify HUD on 56 FHA-insured loans.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA insured loans
where MAC: Failed to obtain and properly analyze the documents
necessary to determine the financial capacity of a non-profit borrower;
charged borrowers fees not permitted by HUD/FHA; failed to identify the
lender credits on the Good Faith Estimate and HUD-1 Settlement
Statement; and failed to implement and maintain a Quality Control Plan
in compliance with HUD/FHA requirements.
28. Mortgage Factory Incorporated, Houston, TX [Docket No. 02-1956-MR]
Action: Settlement Agreement signed on April 4, 2003. Without
admitting fault or liability, Mortgage Factory Incorporated (MFI)
agreed to pay a civil money penalty in the amount of $200,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where MFI: Used prohibited third party originators to originate HUD/
FHA-insured loans; failed to file annual reports regarding FHA loan
application activity; and failed to display or maintain a fair housing
poster at the main office or at a branch office.
29. Mortgage Partners Incorporated, San Diego, CA [Docket No. 01-1531-
MR]
Action: Settlement Agreement signed on April 1, 2003. Without
admitting fault or liability, Mortgage Partners Incorporated (MPI)
agreed to pay a civil money penalty in the amount of $44,500.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA insured loans
where MPI: Failed to maintain and implement a Quality Control Plan in
compliance with HUD requirements; failed to file annual reports
regarding FHA loan application activity as required by HUD
requirements; allowed prohibited branch arrangements; and allowed dual
employment of two loan officers.
30. New York Housing Finance Agency, New York, NY [Docket No. 03-3011-
MR]
Action: Settlement Agreement signed on March 3, 2003. Without
admitting fault or liability, New York Housing Finance Agency (NYHFA)
agreed to pay an administrative payment in the amount of $57,000.
Cause: The Board took this action as a result of NYHFA's failure to
perform property inspections on HUD/FHA-insured multifamily projects.
31. North Carolina Housing Finance Agency, Raleigh, NC [Docket No. 03-
3109-MR]
Action: Settlement Agreement signed on June 30, 2003. Without
admitting fault or liability, North Carolina Housing Finance Agency
(NCHFA) agreed to pay an administrative payment in the amount of
$3,000.
Cause: The Board took this action as a result of NCHFA's failure to
perform a property inspection on one HUD/FHA-insured multifamily
project.
32. Omega Financial Services Incorporated, Whittier, CA [Docket No. 01-
1490-MR]
Action: On December 5, 2001 the Board issued Omega Financial
Services Incorporated (OFSI) a letter withdrawing its FHA approval. On
April 17, 2002 the Department entered into a Settlement Agreement with
OFSI in which, without admitting fault or liability, they agreed to pay
a civil
[[Page 9637]]
money penalty in the amount of $30,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA insured loans
where OFSI: failed to maintain and implement a quality control plan in
compliance with HUD requirements; used falsified documentation and/or
conflicting information in originating nine loans; negotiated
employment agreements which did not conform to HUD requirements; and
failed to notify HUD of its change of address and change of officers.
33. PFC Corporation, McLean, VA [Docket No. 03-3018-MR]
Action: Settlement Agreement signed on June 30, 2003. Without
admitting fault or liability, PFC Corporation (PFCC) agreed to pay an
administrative payment in the amount of $30,000.
Cause: The Board took this action as a result of PFCC's failure to
perform property inspections on HUD/FHA-insured multifamily projects.
34. Priority Mortgage Incorporated, Las Vegas, NV [Docket No. 00-1338-
MR]
Action: On March 19, 2002, the Board sent a letter to Priority
Mortgage Incorporated (PMI) withdrawing its HUD/FHA approval for a
period of five years.
Cause: The Board took this action based on the following violations
of the HUD/FHA requirements in the origination of HUD/FHA-insured loans
where PMI: failed to maintain and implement a quality control plan in
compliance with HUD requirements; failed to file annual reports
regarding FHA loan application activity as required by HUD's
requirements; failed to have mortgagors certify their statements
explaining derogatory credit; failed to ensure that mortgagors did not
sign blank documents; and failed to obtain gift letters in compliance
with HUD's requirements.
35. Rhode Island Housing Mortgage Finance Corporation, Providence, RI
[Docket No. 02-2154-MR]
Action: Settlement Agreement signed on April 3, 2003. Without
admitting fault or liability, Rhode Island Housing Mortgage Finance
Corporation (RIHMFC) agreed to pay an administrative payment in the
amount of $30,000.
Cause: The Board took this action as a result of RIHMFC's failure
to perform property inspections on HUD/FHA-insured multifamily
projects.
36. Sterling Capital Mortgage Company, Houston, TX [Docket No. 02-1910-
MR]
Action: Settlement Agreement signed on September 29, 2003. Without
admitting fault or liability, Sterling Capital Mortgage Company (SCMC)
agreed to indemnify HUD on 44 HUD/FHA-insured loans and pay HUD an
administrative payment in the amount of $25,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where SCMC: used falsified documentation and/or conflicting information
in originating loans and obtained HUD/FHA mortgage insurance; allowed
loans to be originated by personnel not employed or not exclusively
employed by SCMC; violated HUD regulations governing conflict of
interest; failed to adequately verify the amount and/or stability of
effective income; failed to adequately verify the source and/or
adequacy of funds used to close loan transactions; omitted and/or
understated mortgagor liabilities in loan qualifications; failed to
adequately confirm the identity of mortgagors and obtain credit reports
for all name variances; failed to reconcile deficiencies in appraisal
reports; closed loans in excess of the maximum allowable mortgage
amount resulting in over-insured mortgages; failed to reconcile
important file discrepancies; charged mortgagors prohibited fees; and
failed to verify mortgagors' Social Security numbers.
37. Summit Mortgage Corporation, Houston, TX [Docket No. 01-1524-MR]
Action: Settlement Agreement signed on March 5, 2003. Without
admitting fault or liability, Summit Mortgage Company (SMC) agreed to
pay a civil money penalty in the amount of $88,000, and indemnify HUD
on 28 FHA-insured loans for five years.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
including where SMC: failed to verify the source of funds used for
closing costs, earnest money deposits and/or pay off debts; used
inaccurate or unstable income to qualify the mortgagors; used
inaccurate or unstable income to qualify the mortgagors; failed to
adequately document the mortgagor's income; omitted mortgagor
liabilities and/or the liabilities of the non-purchasing spouse in loan
qualifications; approved loans for ineligible borrowers; approved loans
in excess of benchmark ratios without adequate compensating factors;
failed to properly document factors to justify the approval of a
mortgagor with unacceptable credit history; failed to clarify or
document important file discrepancies; closed loans in excess of the
maximum allowable amount resulting in over-insured mortgages; failed to
document that dwellings insured under section 221(d)(2) conformed to
the standards of local housing codes; and failed to comply with escrow
procedures for deferred repairs.
38. Sun American Mortgage Company, Mesa, AZ [Docket No. 00-1328-MR]
Action: Settlement Agreement signed on September 6, 2002. Without
admitting fault or liability, Sun American Mortgage Company (SAMC)
agreed to pay an administrative payment to the Department in the amount
of $50,000 and indemnify nineteen FHA-insured mortgages.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA insured loans
where SAMC: permitted interested third parties to conduct the face to
face interview; failed to identify and resolve conflicting or
inaccurate information obtained in connection with mortgagor's
applications; failed to follow HUD/FHA requirements and prudent lending
practices by permitting a loan officer to originate loans involving a
real estate firm owned by members of the loan officer's family;
knowingly submitted loans to HUD/FHA for insurance containing false
information; closed loans on properties owned by HUD in which the
lender charged the Department financing and/or closing costs that
exceeded reasonable and customary costs in the areas in which the
properties were located; and failed to properly implement a quality
control program in compliance with HUD/FHA requirements.
39. Swan Investments International Incorporated, d/b/a International
Mortgage Corporation, Covina, CA [Docket No. 01-1542-MR]
Action: Settlement Agreement signed on June 18, 2002. Without
admitting fault or liability, Swan Investments International
Incorporated (SIII) agreed to pay a civil money penalty in the amount
of $40,000 and indemnify HUD on one HUD/FHA-insured mortgage.
Cause: The Board took this action based on the following violations
of the HUD/FHA requirements in the origination of HUD/FHA insured loans
where SIII: Failed to maintain and implement a quality control plan in
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compliance with HUD requirements; failed to file annual reports
regarding FHA loan application activity as required by HUD's
requirements; executed a Real Estate Broker Agreement with its loan
officers that is not in compliance with HUD requirements; allowed non-
employees to originate HUD/FHA mortgage loans; and failed to ensure
that its employees work exclusively for SIII.
40. Western Fidelity Mortgage Company, Salt Lake City, UT [Docket No.
01-1585-MR]
Action: Settlement Agreement signed on January 27, 2003. Without
admitting fault or liability, Western Fidelity Mortgage Company (WFMC)
agreed to pay a civil money penalty in the amount of $100,000,
indemnify HUD on 28t FHA-insured mortgages.
Cause: The Board took this action based on the following violations
of the HUD/FHA requirements in the origination of HUD/FHA insured loans
where WFMC: Failed to establish an FHA approved loan correspondent/
sponsor relationship; failed to properly verify the source and/or
adequacy of funds for the down payment and/or closing costs; failed to
properly verify and analyze income; failed to ensure property
eligibility for HUD/FHA mortgage insurance; and failed to ensure
creditworthiness and the use of acceptable qualifying ratios.
Dated: February 20, 2004.
John C. Weicher,
Assistant Secretary for Housing-Federal Housing Commissioner, Chairman,
Mortgagee Review Board.
[FR Doc. 04-4418 Filed 2-27-04; 8:45 am]
BILLING CODE 4210-27-P