[Federal Register Volume 70, Number 242 (Monday, December 19, 2005)]
[Notices]
[Pages 75210-75213]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-7503]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4914-N-07]


Mortgagee Review Board; Administrative Actions

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner, Department of Housing and Urban Development (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: David E. Hintz, Secretary to the 
Mortgagee Review Board, 451 Seventh Street, SW., Washington, DC 20410-
8000, telephone: (202) 708-3856, extension 3594. A Telecommunications 
Device for Hearing- and Speech-Impaired Individuals (TTY) is available 
at (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 the 
Department's Mortgagee Review Board (Board). In compliance with the 
requirements of section 202(c)(5), this notice advises of 
administrative actions that have been taken by the Board from August 
25, 2004 to October 18, 2005.

1. Accent Mortgage Services, Inc., Alpharetta, GA [Docket No. 03-3219-
MR]

    Action: On September 12, 2005, the Board issued a letter to Accent 
Mortgage Services, Inc. (Accent), withdrawing its HUD/FHAapproval for 
five years. The Board also voted to impose a civil money penalty in the 
amount of $6,500.
    Cause: The Board took this action because Accent failed to comply 
with the terms of a Settlement Agreement dated March 26, 2004 to pay 
civil money penalties to the Department in the amount of $75,000.

2. Alliance Mortgage Banking Corporation, Levittown, NY [Docket No. 04-
4818-MR]

    Action: Settlement Agreement signed September 16, 2005. Without 
admitting liability or fault, Alliance Mortgage Banking Corporation 
(Alliance) agreed to pay an administrative payment in the amount of 
$136,775, indemnify HUD on 16 HUD/FHA-insured loans and reimburse 27 
HUD/FHA borrowers unallowable charges in the amount of $12,193. 
Additionally, Alliance agreed to retain an independent quality control 
firm to conduct a quality control review of twenty HUD/FHA loans, 
consisting of current and defaulted loans. Based upon the results of 
this review, Alliance would submit to HUD a corrective action plan that 
addresses the findings of the quality control review and the issues 
outlined in the Notice of Violation.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements in the origination of HUD/FHA-insured loans 
where Alliance: Permitted employees to be involved in the processing of 
loan applications on loans where they were the seller; used falsified 
documentation or conflicting information in originating loans and/or 
obtaining HUD/FHA-insured mortgages; failed to resolve discrepancies or 
fully obtain and analyze the terms and conditions of the real estate 
transaction and consider the acquisition cost of recently acquired 
properties in the underwriting of loans; failed to properly verify the 
source and/or adequacy of funds for the downpayment and/or closing 
costs; failed to properly verify income; failed to limit seller 
contributions to the maximum permitted by HUD; failed to ensure timely 
completion and/or establish an escrow account for incomplete property 
repairs; submitted delinquent loans for mortgage insurance endorsement; 
failed to remit Up-Front Mortgage Insurance Premiums within 15 days 
from the date of loan closing;

[[Page 75211]]

permitted a borrower to obtain a HUD/FHA loan within three years of a 
foreclosed loan; violated HUD/FHA third party origination restrictions; 
and failed to ensure borrowers, who had been charged a commitment fee, 
executed a Commitment Agreement guaranteeing discount points and/or 
interest rates, at least 15 days prior to the date the loan closed.

3. American Union Mortgage, Inc., Ogden, UT [Docket No. 05-5049-MR]

    Action: On October 18, 2005, the Board issued a letter to American 
Union Mortgage, Inc. (American Union) withdrawing its HUD/FHA approval 
for five years. The Board also voted to impose a civil money penalty in 
the amount of $6,500.
    Cause: The Board took this action because American Union failed to 
comply with the terms of a Settlement Agreement with the Department 
dated May 14, 2004 to pay civil money penalties to the Department in 
the amount of $150,000.

4. Bancplus Home Mortgage Center, Inc., Ft. Lauderdale, FL [Docket No. 
04-4450-MR]

    Action: Settlement Agreement signed May 24, 2005. Without admitting 
liability or fault, Bancplus Home Mortgage Center, Inc. agreed to pay 
an administrative payment in the amount of $24,000 and indemnify HUD on 
two 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 Bancplus: Failed to implement a Quality Control Plan in 
conformance with HUD/FHA requirements (repeat finding); and failed to 
properly document the source and/or adequacy of funds used for the 
downpayment and/or closing cost.

5. Costal Capital Corp., Greenvale, NY [Docket No. 04-4384-MR]

    Action: Settlement Agreement signed June 7, 2005. Without admitting 
liability or fault, Costal Capital Corp. (Costal) agreed to pay a civil 
money penalty in the amount of $134,500, indemnify HUD on three loans 
and reimburse borrowers for impermissible expenses totaling $7,014.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements in the origination of HUD/FHA-insured loans 
where Costal: Violated third party origination restrictions; improperly 
allowed documents to pass through the hands of interested third 
parties; certifying falsely on form HUD-92900-A, Part II, Lender 
Certification; approved loans where the total origination fees charged 
to the borrowers were in excess of one percent; failed to properly 
verify the source and adequacy of funds used for the downpayment and/or 
closing costs; permitted borrowers to be charged fees that were not 
allowable under HUD/FHA requirements; failed to disclose all fees paid 
by the borrowers or on their behalf on the HUD-1 Settlement Statement; 
and failed to implement and maintain a Quality Control Plan in 
compliance with HUD/FHA requirements.

6. De Oro, Inc., Ontario, CA [Docket No. 05-5073-MR]

    Action: On September 12, 2005, the Board issued a letter to De Oro, 
Inc. (De Oro) withdrawing its HUD/FHA approval for five years. The 
Board also voted to impose a civil money penalty in the amount of 
$26,000.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements where De Oro: Failed to comply with the terms 
of agreements requiring De Oro to indemnify the Department; failed to 
accrue or note a significant contingent liability in HUD's Lender 
Assessment Sub-System financial statement submission; misrepresented 
its net worth; and provided HUD a false certification.

7. Global Financial Services, Inc., Bethesda, MD [Docket No. 04-4263-
MR]

    Action: Settlement Agreement signed September 13, 2005. Global 
Financial Services, Inc. (Global) agreed to pay a civil money penalty 
in the amount of $62,500 and to immediate withdrawal of Global's HUD/
FHA-approval for four years.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements in the origination of HUD/FHA-insured loans 
where Global: Employed an individual who has been debarred by the 
Department; and failed to implement and maintain a Quality Control Plan 
in compliance with HUD/FHA requirements.

8. Home Loan Mortgage Corporation, Hesperia, CA [Docket No. 05-5002-MR]

    Action: On April 1, 2005, the Board issued a letter to Home Loan 
Mortgage Corporation (Home) withdrawing its HUD/FHA-approval for five 
years. The Board also voted to impose a civil money penalty in the 
amount of $6,500.
    Cause: The Board took this action because Home failed to comply 
with the terms of the Settlement Agreement executed with the Department 
dated May 3, 2001.

9. iMortgage Funding Corporation d/b/a Guaranty Mortgage, Houston, TX 
[04-4435-MR]

    Action: Settlement Agreement signed May 11, 2005. Without admitting 
liability or fault, iMortgage Funding Corporation d/b/a Guaranty 
Mortgage (iMortgage), agreed to pay a civil money penalty in the amount 
of $379,100 and indemnify HUD on 17 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 iMortgage: Paid prohibited compensation to employees performing 
underwriting duties; failed to remit Upfront Mortgage Insurance 
Premiums to HUD/FHA within 15 days of loan closing; failed to adopt and 
implement a Quality Control Plan in compliance with HUD/FHA 
requirements; used documentation that was falsified and/or contained 
unresolved discrepancies; failed to properly verify the source and 
adequacy of funds used for the cash requirements and allowed funds for 
closing from unacceptable sources; failed to properly document and/or 
calculate income used for qualification or to justify loan approval 
with excessively high ratios of debt to income; omitted and understated 
liabilities, and failed to consider contingent liabilities in loan 
qualification; failed to obtain credit reports that met HUD/FHA 
requirements; approved mortgagors with unacceptable credit histories, 
without adequate justification; approved mortgage loans for ineligible 
mortgagors; and failed to document properly or analyze adequately the 
credit histories of mortgagors who did not use traditional credit or 
who did not have acceptable traditional credit histories.

10. Karim Enterprises, Inc., St. Charles, MO [Docket No. 05-5017-MR]

    Action: Settlement Agreement signed July 8, 2005. Without admitting 
liability or fault, Karim Enterprises, Inc. (Karim) agreed to pay HUD a 
civil money penalty in the amount of $22,000.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements in the origination of HUD/FHA-insured loans 
where Karim: Loaned gift funds to a donor in HUD/FHA-insured mortgage 
transaction; submitted or caused the submission of false information to 
HUD in connection with a HUD/FHA-insured mortgage transaction; and 
failed to

[[Page 75212]]

implement a Quality Control Plan in conformance with HUD/FHA 
requirements.

11. KB Home Mortgage Company, Los Angeles, CA [Docket No. 05-5020-MR]

    Action: Settlement Agreement signed June 27, 2005. Without 
admitting liability or fault, KB Home Mortgage Company (KB Home) agreed 
to pay HUD an administrative payment in the amount of $3,200,000. KB 
Home also agreed to prepare and submit a compliance plan acceptable to 
HUD that details the policies and procedures KB Home will implement to 
rectify the violations of HUD requirements identified in the Notice of 
Violation.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements in the origination of HUD/FHA-insured loans 
where KB Home: Approved loans with ratios exceeding guidelines without 
compensating factors or without adequate compensating factors; approved 
loans based on effective income that was overstated, improperly 
calculated or inadequately documented; failed to include or determine 
all of the mortgagor's liabilities and/or liabilities of the non-
purchasing spouse in loan qualification; failed to properly verify the 
source and/or adequacy of funds required and/or there were insufficient 
funds verified to close; approved loans to borrowers who were not 
eligible because of unpaid court-ordered judgments and delinquent 
federal debt; approved loans to borrowers who were not eligible because 
of past credit performance; failed to address and resolve significant 
file discrepancies; failed to ensure property compliance with the 
Builder's Certification of Plans, Specifications and Site, HUD form 
92541; failed to ensure the mortgagor met the minimum required 
investment because the loan exceeded the maximum allowable mortgage 
amount; failed to ensure the mortgagor was not charged excessive and/or 
unallowable fees and/or there was no documentation supporting the fee; 
failed to ensure that the HUD-1 Settlement Statement reflected the 
earnest money deposit that was shown on the sales contract and the loan 
application; failed to ensure the accuracy of the information contained 
in the HUD-1A, Addendum to the HUD-1 Settlement Statement; and failed 
to ensure gift letters met HUD requirements.

12. Major Mortgage Corporation, Lathrup Village, MI [Docket No. 05-
5071-MR]

    Action: On September 8, 2005, the Board issued a letter to Major 
Mortgage Corporation (Major Mortgage) withdrawing its HUD/FHA approval 
for five years. The Board also voted to impose a civil money penalty in 
the amount of $6,500.
    Cause: The Board took this action because Major Mortgage failed to 
comply with the terms of a Settlement Agreement dated November 30, 1998 
whereby Major Mortgage agreed to indemnify HUD on 15 loans.

13. Megamerica Mortgage Group, Inc., San Antonio, TX [Docket No. 04-
4262-MR]

    Action: Settlement Agreement signed April 6, 2005. Without 
admitting liability or fault, Megamerica Mortgage Group, Inc. 
(Megamerica) agreed to pay an administrative payment in the amount of 
$20,500.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements in the origination of HUD/FHA-insured loans 
where Megamerica: Operated branch offices under prohibited branch 
arrangements; failed to implement and maintain a Quality Control Plan 
in compliance with HUD/FHA requirements; failed to file annual reports 
regarding loan application activity required by Mortgagee Letter 95-3 
and HUD Handbook 4155.1 REV-4 CHG 1; and charged mortgagors excessive 
or prohibited fees.

14. Pike Creek Mortgage Services, Inc., Wilmington, DE [Docket No. 04-
4629-MR]

    Action: Settlement Agreement signed September 14, 2005. Without 
admitting liability or fault, Pike Creek Mortgage Services, Inc. (Pike 
Creek) agreed to pay a civil money penalty in the amount of $19,000.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements in the origination of HUD/FHA-insured loans 
where Pike Creek: Failed to ensure that loans were originated by its 
employees; falsely certified on the HUD/VA Addendum to the Uniform 
Residential Loan Application, form HUD-92900-A, Part II Lender 
Certification; failed to retain a loan origination file; failed to file 
annual reports regarding loan application activity; and failed to 
implement and maintain a Quality Control Plan in compliance with HUD/
FHA requirements.

15. RTM Funding, Inc., Kingwood, TX [Docket No. 03-3169-MR]

    Action: Settlement Agreement signed April 14, 2005. Without 
admitting liability or fault, RTM Funding, Inc. (RTM) agreed to pay a 
civil money penalty in the amount of $11,000.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements in the origination of HUD/FHA-insured loans 
where RTM: Failed to maintain entire case file at least two years from 
date of insurance endorsement; failed to implement and maintain a 
Quality Control Plan in compliance with HUD/FHA requirements; and 
failed to file annual reports regarding loan activity as required by 
Mortgagee Letter 95-3 and HUD Handbook 4155.1 REV-4 CHG-1.

16. Saxon Equity Mortgage Bankers, Ltd., Hauppauge, NY [Docket No. 05-
5046-MR]

    Action: Settlement Agreement signed September 13, 2005. Without 
admitting liability or fault, Saxon Equity Mortgage Bankers, Ltd. 
(Saxon) agreed to pay the Department a civil money penalty in the 
amount of $13,000.
    Cause: The Board took this action because Saxon failed to comply 
with the terms of two indemnification agreements signed with the 
Department dated June 13, 1994 and February 28, 2001. Saxon has now 
entered into an acceptable payment agreement for amounts due under the 
agreements.

17. Susan Mittman Real Estate, Inc., Brooklyn, NY [Docket No. 04-4444-
MR]

    Action: Settlement Agreement signed May 11, 2005. Without admitting 
liability or fault, Susan Mittman Real Estate, Inc. (Susan Mittman) 
agreed to pay an administrative payment 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 Susan Mittman: Originated loans where the borrowers were charged 
fees in excess of the one percent allowable origination fee for 
services covered by the origination fee; and failed to implement and 
maintain a Quality Control Plan in compliance with HUD/FHA 
requirements.

18. Terra Financial Group, Inc., Philadelphia, PA [Docket No. 04-4299-
MR]

    Action: Settlement Agreement signed September 22, 2005. Without 
admitting liability or fault, Terra Financial Group, Inc. (Terra) 
agreed to pay an administrative payment in the amount of $7,000.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements in the origination of HUD/FHA-insured loans

[[Page 75213]]

where Terra: Failed to ensure that loans were originated by its 
employees; failed to maintain complete loan origination files; failed 
to provide evidence that original documents were reviewed; failed to 
file annual reports regarding loan application activity as required by 
Mortgagee Letter 95-3 and HUD Handbook 4155.1; and failed to implement 
and maintain an adequate Quality Control Plan in compliance with HUD/
FHA requirements.

19. Tucson Mortgage, LLC, Tucson, AZ [Docket No. 04-4934-MR]

    Action: Settlement Agreement signed September 22, 2005. Without 
admitting liability or fault, Tucson Mortgage, LLC (Tucson) agreed to 
pay an administrative payment in the amount of $45,000.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements in the origination of HUD/FHA-insured loans 
where Tucson: Allowed an unapproved branch to originate HUD/FHA-insured 
mortgages; provided false documents to originate a HUD/FHA-insured 
mortgage; failed to file loan application reports to HUD as required by 
the Mortgagee Letter 95-3 and HUD Handbook 4155.1 REV-4 CHG 1; failed 
to perform Quality Control reviews; and failed to provide complete loan 
origination files for review.

20. United Lending Partners, LP, Irving, TX [Docket No. 05-5053-MR]

    Action: On September 8, 2005, the Board issued a letter to United 
Lending Partners, Ltd., (United Lending) withdrawing its HUD/FHA 
approval for five years. The Board also voted to impose a civil money 
penalty in the amount of $26,000.
    Cause: The Board took this action because United Lending failed to 
comply with the terms of agreements dated June 3, 2003, November 13, 
2003 and December 2, 2003 requiring United Lending to indemnify the 
Department on 15 loans.

    Dated: December 12, 2005.
Brian D. Montgomery,
Assistant Secretary for Housing--Federal Housing Commissioner.
[FR Doc. E5-7503 Filed 12-16-05; 8:45 am]
BILLING CODE 4210-27-P