[Federal Register Volume 71, Number 125 (Thursday, June 29, 2006)]
[Notices]
[Pages 37089-37092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-10225]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4914-N-08]
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, Room B-133 Portals 200,
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 March 14,
2005 to May 16, 2006.
1. ABN Amro Mortgage Group, Inc., Ann Arbor, MI [Docket No. 04-4318-MR]
Action: Settlement Agreement signed December 30, 2005. Without
admitting wrongdoing or fault, ABN Amro Mortgage Group, Inc. (ABN Amro)
agreed to pay the United States of America the sum of $16,850,000. ABN
Amro also agreed not to submit claims or cause claims to be submitted
to HUD for any of the 783 mortgage loans covered in the Settlement
Agreement.
Cause: The Board took this action based on a violation of HUD/FHA
requirements in the origination of HUD/FHA-insured loans where ABN Amro
made false certifications to HUD on 26,775 FHA-insured mortgages.
2. AMortgage Link, LLC, Memphis, TN [Docket No. 03-3170-MR]
Action: Settlement Agreement signed October 20, 2005. Without
admitting liability or fault, AMortgage Link, LLC (AMortgage Link)
agreed to pay HUD an administrative payment in the amount of $33,500.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where AMortgage Link: Failed to ensure that its employees worked
exclusively for AMortgage Link; allowed prohibited payments to
individuals who received other payments for services related to a loan
transaction; failed to implement and maintain a Quality Control Plan in
compliance with HUD/FHA requirements; submitted falsified and
conflicting documentation to obtain FHA mortgage insurance; and failed
to provide files that originating lenders are required to maintain.
3. Apreva, Inc., Bellevue, WA [Docket No. 06-6001-MR]
Action: Settlement Agreement signed March 3, 2006. Without
admitting fault or liability, Apreva, Inc. (Apreva) and Apreva's
President agreed: To an indefinite voluntary withdrawal of its FHA-
approval until it has paid, or otherwise indemnified HUD for its losses
on thirty-four mortgages; to pay HUD a civil money penalty in the
amount of $316,000; that Apreva's President will not have a controlling
interest (defined as 51% or greater) in any other FHA-approved mortgage
company during the time Apreva's withdrawal is in effect; and if Apreva
fails to make any civil money penalty payment under the Settlement
Agreement that Apreva's President will personally guarantee such
payment.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where Apreva: Failed to provide adequate compensating factors to
justify the approval of mortgages with ratios exceeding HUD/FHA
standards; failed to adequately document employment income in
accordance with HUD/FHA requirements; failed to properly verify the
source of funds used for the downpayment and/or closing costs; failed
to evaluate credit history and/or explain negative credit information
to ensure compliance with HUD/FHA credit requirements; approved
mortgages without establishing that the interest rate buy-down will not
have an adverse effect on the borrower's ability to make mortgage
payments in accordance with HUD/FHA requirements; failed to adequately
explain and/or resolve important file discrepancies or irregularities;
failed to obtain the borrower's original signature on the Uniform
Residential Mortgage Application; improperly allowed the inclusion of
gift funds in its calculation of cash reserves; falsely certified that
mortgages were eligible for HUD/FHA mortgage insurance; allowed non-
exclusive employees to originate HUD/FHA-insured mortgages; and failed
to implement and maintain a Quality Control Plan and review procedures
in compliance with HUD/FHA requirements.
4. Budget Mortgage Bankers, Ltd., New Hyde Park, NY [Docket No. 05-
5076-MR]
Action: Settlement Agreement signed March 6, 2006. Without
admitting liability or fault, Budget Mortgage Bankers, Ltd. (Budget)
agreed to indemnify HUD for any losses incurred on 15 HUD/FHA-insured
loans and, pay HUD and administrative payment in the amount of
$238,500.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where Budget: Approved more than one HUD/FHA-insured loan for borrowers
without adequate justification; made false certifications on the HUD
Form 92900-A, Part II, Lender Certification; failed to ensure that loan
amounts did not exceed the maximum loan-to-value limits; failed to
underwrite the loan in accordance with HUD/FHA requirements because it
permitted the use of an appraiser not approved by the Department;
failed to originate and underwrite streamline refinance loans in
accordance with HUD/FHA requirements; failed to establish the source
and/or adequacy of funds for the down payment and/or closing costs;
failed to ensure borrowers met the minimum credit requirements; failed
to provide and/or verify significant compensating factors for loans
with back-end ratios that exceeded HUD/FHA standards; failed to
properly verify and analyze the borrower's income and/or stability of
employment; failed to ensure that verifications and other supporting
documents did not pass
[[Page 37090]]
through the hands of an interested third party; failed to address
discrepancies in documents used to originate HUD/FHA mortgages; failed
to ensure all parties involved in the transaction were screened to
determine their eligibility to participate in HUD/FHA's mortgage
insurance program; failed to ensure that all required repairs for a
property insured as a Section 203 (k) loan were completed before the
loan was refinanced into a Section 203(b) loan; failed to ensure that
relevant loan documents were fully executed; permitted an employee, who
was also a party to the transaction, to be involved in processing the
loan; and failed to implement and maintain a Quality Control Plan in
conformance with HUD/FHA requirements.
5. Columbia Funding Group, Inc., Beaverton, OR [Docket No. 05-5078-MR]
Action: Settlement Agreement signed May 1, 2006. Without admitting
liability or fault, Columbia Funding Group, Inc. (Columbia), agreed to
pay HUD an administrative payment in the amount of $20,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where Columbia: Failed to ensure that HUD/FHA-insured loans were
originated by employees of Columbia; falsely certified on the HUD/VA
Addendum to the loan application that the information was obtained
directly from the borrower by a fulltime employee or Columbia's duly
authorized agent; failed to ensure that employees did not work at other
companies in a related industry; allowed mortgagors to sign incomplete
or blank documents; failed to retain complete origination files; failed
to ensure that the person performing quality control reviews was not
involved in origination functions; and failed to adopt and maintain a
Quality Control Plan.
6. Discover Mortgage Company, Vancouver, WA [Docket No. 04-4947-MR]
Action: Settlement Agreement signed October 18, 2005. Without
admitting liability or fault, Discover Mortgage Company (Discover)
agreed to pay HUD an administrative payment in the amount of $70,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where Discover: F ailed to adopt and implement a Quality Control Plan
in compliance with HUD/FHA requirements for years 2002 and 2003 (repeat
finding); originated HUD/FHA-insured loans from branch offices with
prohibited branch arrangements; and failed to retain complete loan
origination files in accordance with HUD/FHA requirements.
7. First Florida State Mortgage Corporation, Melbourne, FL [Docket No.
05-5063-MR]
Action: Settlement Agreement signed March 10, 2006. Without
admitting liability or fault, First Florida State Mortgage Corporation
(First Florida) agreed to pay HUD an administrative payment in the
amount of $8,500.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where First Florida: Failed to implement and maintain a Quality Control
Plan in compliance with HUD/FHA requirements in the year 2004; violated
HUD/FHA third party origination restrictions in six loans; made false
certifications on the Uniform Residential Loan application and HUD/VA
Addendum to the Uniform Residential Loan Application in six loans; and
failed to ensure credit documents did not pass through the hands of
interested third parties in two mortgages.
8. First Rate Capital Corporation, Melville, NY [Docket No. 05-5072-MR]
Action: Settlement Agreement signed March 21, 2006. Without
admitting liability or fault, First Rate Capital Corporation (First
Rate) agreed to indemnify HUD for any losses on three HUD/FHA-insured
loans. First Rate also agreed to pay HUD an administrative payment in
the amount of $109,500.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where First Rate: Used conflicting information to originate HUD/FHA
insured loans; violated third party origination restrictions; permitted
individuals who were not exclusive employees to originate HUD/FHA
loans; signed and falsely certified on the HUD 92900-A, Part II, Lender
Certification; failed to ensure that the borrowers met the statutory
three percent minimum required investment in the property; failed to
provide evidence that original verification documents were received and
reviewed; failed to document the source and/or adequacy of funds for
downpayment and/or closing costs; failed to properly analyze the
borrower's credit history to ensure HUD's minimum credit requirements
were met; failed to properly verify the borrower's income and/or stable
employment history; failed to ensure that the HUD-1 Settlement
Statement accurately reflect the loan transaction; failed to reconcile
incongruities in appraisals or accepted incomplete appraisal reports;
and failed to implement and maintain a Quality Control Plan in
conformance with HUD requirement.
9. Flagstar Bank, FSB, Troy, MI [Docket No. 05-5031-MR]
Action: Settlement Agreement signed January 11, 2006. Without
admitting wrongdoing, liability or fault, Flagstar Bank, FSB (Flagstar)
agreed: To comply with all of the provisions of the Fair Housing Act;
to resolve all outstanding issues raised in the Notice of Violation
within thirty days of the effective date of the Settlement Agreement;
and to pay HUD a civil money penalty in the amount of $182,000.
Cause: The Board took this action based on a violation of HUD/FHA
requirements in the origination of HUD/FHA-insured loans where Flagstar
violated the Fair Housing Act from May 1, 2001 to January 31, 2002 by
charging non-minority borrowers higher fees than minority borrowers.
10. George Mason Mortgage, LLC, Fairfax, VA [Docket No. 05-5055-MR]
Action: Settlement Agreement signed December 1, 2005. Without
admitting liability or fault, George Mason Mortgage, LLC (George Mason)
agreed to pay HUD an administrative payment in the amount of $45,000.
George Mason also agreed to indemnify HUD for any losses on 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 George Mason: Failed to properly analyze the borrower's credit
history to ensure minimum credit requirements were met and conflicting
information was resolved, prior to originating HUD/FHA-insured loans;
failed to adequately verify and document the source and/or adequacy of
funds used for downpayment and/or closing costs; failed to provide
evidence that original verification documents were received and
reviewed; and failed to set up escrow accounts for the deposit of buy-
down funds.
11. Greenwich Home Mortgage Corporation, Cedar Knolls, NJ [Docket No.
05-5077-MR]
Action: Settlement Agreement signed March 3, 2006. Without
admitting liability or fault, Greenwich Home
[[Page 37091]]
Mortgage Corporation (Greenwich) agreed to: Pay HUD an administrative
payment in the amount of $58,000; indemnify HUD for any losses on five
loans; and refund borrowers excessive fees on 18 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 Greenwich: Failed to ensure the borrower was eligible for HUD/FHA
mortgage insurance, with respect to the intended use of the property
and occupancy status; failed to establish the source and/or adequacy of
funds for the downpayment and/or costs due at closing; failed to ensure
borrowers met their minimum required cash investment; failed to provide
significant compensating factors for loans approved with fixed payment
to income ratios that exceeded HUD standards; failed to properly
document the borrower's income and/or a stable two-year employment
history; failed to maintain documentation that 203(k) required repairs
were completed in a timely and satisfactory manner and escrowed funds
were properly disbursed; charged borrowers fees in excess of the actual
cost for services, without adequate justification; and the Quality
Control Plan was missing a few compliance requirements.
12. Home Consultants, Inc., Lake Ariel, PA [Docket No. 04-4792-MR]
Action: Settlement Agreement signed March 9, 2006. Without
admitting liability or fault, Home Consultants, Inc. (HCI) agreed to
indemnity HUD for any losses on 12 loans; refund unallowable fees
identified in 48 loans; and to pay $1,777.34 to buy-down one loan. Home
also agreed to pay HUD an administrative payment in the amount of
$81,500.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where HCI: used false and conflicting information to originate FHA
loans; failed to establish the source and/or adequacy of funds used for
down payment and/or closing costs; failed to properly analyze the
borrower's credit history to ensure HUD's minimum credit requirements
were met; failed to properly verify and/or document effective income;
failed to ensure the loan closed in the same manner as it was
underwritten and approved; failed to comply with HUD/FHA requirements
concerning contingent liabilities; failed to ensure borrowers met the
minimum required investment; failed to ensure that the documents used
to approve the loans were not handled by an interested party to the
transaction; charged borrowers fees that are specifically prohibited by
HUD; failed to ensure the property met minimum property standards;
failed to resolve discrepancies regarding ownership of properties
before the loans were submitted to HUD and HCI accepted an incomplete
Uniform Residential Appraisal Report that did not support the final
value conclusion; and implemented a Quality Control Plan that did not
contain all elements required by HUD.
13. Liberty Mortgage Brokers, Richmond Hill, NY [Docket No. 04-4370-MR]
Action: Settlement Agreement signed February 28, 2006. Without
admitting liability or fault, Liberty Mortgage Brokers (Liberty) agreed
to pay HUD an administrative payment in the amount of $10,000. Also,
Liberty voluntarily surrendered its FHA approval effective August 19,
2005 and has agreed not to re-apply for FHA approval.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where Liberty: participated in a scheme with other lenders to violate
HUD conflict of interest regulations; failed to file annual reports
regarding loan application activity; failed to maintain complete loan
files; and failed to implement and maintain an adequate Quality Control
Plan in compliance with HUD/FHA requirements.
14. Mid-America Mortgage Corporation, Denver, CO [Docket No. 05-5052-
MR]
Action: On March 14, 2005, the Board issued a letter to Mid-America
Mortgage Corporation (Mid-America) suspending its FHA approval pending
resolution of the Indictment against Mid-America's President.
Cause: The Board took this action because Mid-America's President/
owner was indicted in United States District Court for conspiring with
others to falsify information included in loan applications submitted
to HUD for the purpose of obtaining mortgage loans with HUD/FHA
mortgage insurance.
15. Moreland Financial Corporation, Fort Washington, PA [Docket No. 04-
4433-MR]
Action: The Board voted to reject Moreland Financial Corporation's
(Moreland) settlement offer of installment payments and insisted that
Moreland pay $22,000 in administrative payments in one lump sum.
Cause: The Board took this action because Moreland failed to
finalize a settlement previously considered by the Board.
16. Mortgage Access Corporation d/b/a Weichert Financial Services,
Morris Plains, NJ [Docket No. 05-5044-MR]
Action: Settlement Agreement signed December 20, 2005. Mortgage
Access Corporation (Mortgage Access) agreed to indemnify HUD for any
losses incurred on nine loans. Mortgage Access also agreed to make an
administrative payment to HUD in the amount of $53,500.
Caution: The Board took this action based on the following
violations of HUD/FHA requirements in the origination of HUD/FHA-
insured loans where Mortgage Access: failed to properly document the
source and/or adequacy of funds used for the downpayment and closing
costs; failed to properly document the amount of reserves used for loan
approval; failed to properly document the borrower's employment, income
or both; failed to ensure that verification and other supporting
documents did not pass through the hands of an interested third party;
failed to resolve discrepancies between the Uniform Residential
Appraisal Report, the HUD-1 Settlement Statement, and the sales
contract; failed to ensure that the loan amounts did not exceed the
maximum loan-to-value limits; charged borrowers unallowable fees;
failed to implement and maintain a Quality Control Plan in conformance
with HUD/FHA requirements; and failed to retain complete loan
origination files for review and to comply with HUD's requests for
documentation.
17. U.S. Mortgage Finance Corporation, Timonium, MD [Docket No. 04-
4227-MR]
Action: Settlement Agreement signed March 21, 2006. Without
admitting liability or fault, U.S. Mortgage Finance Corporation (USMFC)
agreed to pay HUD an administrative payment in the amount of $72,000.
USMFC also agreed to indemnify HUD for any losses incurred on five
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 USMFC: allowed its employee to work for another entity while
employed by USMFC; employed an ineligible loan officer (a debarred
individual) in violation of HUD/FHA approval standards; falsely stated
on the Uniform Residential Loan Application (URLA) that the
applications were taken by face-
[[Page 37092]]
to-face interviews by an employee, and falsely certified on the
Addendum to the URLA; used falsified documentation and/or conflicting
information in originating loans and obtaining HUD/FHA mortgage
insurance; failed to follow HUD-required procedures in calculating
maximum mortgage amounts, thereby insuring HUD/FHA loans that exceed
HUD limits; failed to follow HUD-required procedures in cases where a
non-profit agency was providing the down payment assistance in the form
of a gift; and failed to adequately verify the amount and stability of
effective income.
Dated: June 16, 2006.
Brian D. Montgomery
Assistant Secretary for Housing Federal Housing Commissioner.
[FR Doc. E6-10225 Filed 6-28-06; 8:45 am]
BILLING CODE 4210-67-P