[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]


-----------------------------------------------------------------------

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.

-----------------------------------------------------------------------

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