[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

[[Page 9638]]

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