[Federal Register Volume 72, Number 123 (Wednesday, June 27, 2007)]
[Notices]
[Pages 35249-35251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-12374]
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-5157-N-01]
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: David E. Hintz, Secretary to the
Mortgagee Review Board, 451 Seventh Street, Portals 200, SW, Room B-
133, 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 October
18, 2005, to March 26, 2007.
1. A&E Mortgage Company, LLC, Roselle, New Jersey, [Docket No. 02-1971
MR]
Action: Settlement Agreement signed September 7, 2006. Without
admitting wrongdoing or fault, A&E Mortgage Company, LLC (A&E) agreed
to pay HUD an administrative payment in the amount of $300,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where A&E: Used falsified and/or conflicting documents in the
origination of eight HUD/FHA-insured mortgages; failed to ensure loan
applications were taken by authorized employees; and used a loan
officer contract which required the loan officer to pay her own
expenses.
2. Atlantic Coast Mortgage Services, Pleasantville, NJ [Docket No. 06-
6026-MR]
Action: Settlement Agreement signed February 8, 2007. Without
admitting liability or fault, Atlantic Coast Mortgage Services
(Atlantic) agreed to pay HUD an administrative payment in the amount of
$9,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where Atlantic: Failed to ensure that one of its employees worked
exclusively for it; and failed to implement and maintain a Quality
Control Plan in compliance with HUD/FHA requirements.
3. BSM Financial LP dba Banksource Mortgage, Addison, TX [Docket No.
05-5047-MR]
Action: Settlement Agreement signed October 4, 2006. Without
admitting liability or fault, BSM Financial LP dba Banksource Mortgage
(BSM) agreed to: Waive all insurance benefits or indemnify HUD for any
losses on 15 HUD/FHA-insured loans; within 60 days of the effective
date of the settlement agreement, provide documentation sufficient to
demonstrate that BSM complied with HUD/FHA requirements relating to
local health authority approval of private or cooperative water and
sewage disposal systems with respect to three properties. If BSM failed
to provide the documents within the timeframe agreed to, BSM would
waive all insurance benefits or indemnify HUD for any losses that may
be incurred in relations to the three loans if HUD is unable to sell
the referenced properties subject to FHA insurance because of problems
with the water and/or septic systems; pay HUD $49,784 which represents
the aggregate amount by which the principal balances of eight loans
were over-insured at the time of commitment; and pay HUD an
administrative payment in the amount of $150,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where BSM: Failed to remit Upfront Mortgage Insurance Premiums in a
timely manner; failed to implement and maintain a Quality Control Plan
that complied with HUD/FHA requirements; failed to properly verify,
document and/or calculate income used in loan qualification in
accordance with HUD/FHA requirements; failed to document the source of
funds required to close and/or pay off debts, or there were
[[Page 35250]]
insufficient funds verified to close and/or pay off debts; calculated
borrowers' total mortgage payments (including principal, interest,
taxes and hazard insurance) using real estate taxes that were
understated and, in some cases, also improperly omitted debts when
assessing loan qualification; failed to comply with HUD/FHA
requirements regarding qualification for streamline refinance
transactions; approved loans with ratios exceeding HUD/FHA benchmark
guidelines without compensating factors or without adequate
compensating factors; allowed credit reports and/or income to asset
verification forms and documentation to pass through the hands of third
parties and, in certain cases, falsely certified that the documents
were requested and received directly by BSM from the providers and/or
that the documents received were true copies of the originals; allowed
a non-purchasing spouse to take an ownership interest in a HUD/FHA-
insured property, in violation of mortgage eligibility requirements;
failed to ensure that property that was proposed or under construction
was eligible for HUD/FHA mortgage insurance; closed loans in excess of
the maximum allowable amount resulting in over-insured mortgages;
failed to comply with Construction-Permanent Loan Program requirements;
failed to ensure that the buyer, seller and/or settlement agent
completed HUD-1 Addendum certifications; allowed one of its
underwriters to also perform work for a manufactured housing seller;
and used falsified documents and/or documents that contained unresolved
discrepancies in the origination of HUD/FHA-insured mortgage loans.
4. Citrus State Mortgage, Incorporated, Mount Dora, FL [Docket No. 05-
5079-MR]
Action: Settlement Agreement signed September 15, 2006. Without
admitting liability or fault, Citrus State Mortgage, Incorporated
(Citrus) and its President agreed to pay HUD an administrative payment
in the amount of $35,000. Citrus also agreed not to reapply for
reinstatement as an FHA-approved lender until March 1, 2008.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where Citrus: Paid prohibited referral fees to another entity
controlled by one of the Citrus's underwriters; paid its underwriters
prohibited commission payments; charged prohibited document preparation
fees to an entity owned and controlled by one of Citrus's underwriters;
and failed to develop and implement a Quality Control Plan and failed
to perform a Quality Control review of two loans that went into default
within the first six months.
5. Colban Funding, Incorporated, Endwell, NY [Docket No. 04-4587-MR]
Action: On October 18, 2005, the Board issued a letter to Colban
Funding, Incorporated (Colban) withdrawing its HUD/FHA approval for
three years. The Board also voted to impose a civil money penalty in
the amount of $76,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where Colban: Violated HUD/FHA third party restrictions by allowing non
HUD/FHA-approved mortgage brokers to participate in the origination of
HUD/FHA-insured mortgages; falsely certified on forms HUD-92900-A,
Addendum to the Uniform Residential Loan Application that the
information contained in the Uniform Residential Loan Application and
the Addendum was obtained directly from the borrower by a full-time
employee of Colban or its duly authorized agent; failed to identify all
of the HUD/FHA-approved lenders involved in the origination of HUD/FHA
insured mortgage loans on HUD-92900-A and in HUD's database system;
failed to provide evidence that, where faxed documents were used,
original verification documents were received and reviewed; failed to
ensure that borrowers met the three percent minimum required cash
investment; failed to provide adequate analysis or data verification of
prior sales that occurred within one year of the appraisal report for
three HUD/FHA-insured loans; failed to include and/or adequately
evaluate borrower's debt when underwriting loans; failed to adequately
document the source and transfer of funds used for the downpayment and/
or closing costs; failed to identify incorrect and inconsistent
information on the HUD-1 Settlement Statement that affected conditions
under which the loan was closed.
6. Colony Mortgage Corporation, Fairview Park, OH [Docket No. 05-5057-
MR]
Action: Settlement Agreement signed August 22, 2006. Without
admitting liability or fault, Colony Mortgage Corporation, (Colony)
agreed to pay HUD an administrative payment in the amount of $38,000.
Colony also agreed to indemnify HUD for any losses 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 Colony: Violated third party origination restrictions by
sponsoring loans from an unapproved entity; caused a false
certification on form HUD-92900-A; failed to document the source and/or
adequacy of funds for the downpayment and/or closing costs; failed to
properly verify the borrower's income and/or stable employment history;
failed to ensure that borrowers were not suspended, debarred or
otherwise excluded from participating in the Department's programs; and
failed to develop and implement a Quality Control Plan in accordance
with HUD/FHA requirements.
7. Faith Financial Group, Incorporated, Miami Lakes, FL [Docket No. 05-
5041-MR]
Action: Settlement Agreement signed October 20, 2006. Without
admitting liability or fault, Faith Financial Group, Incorporated
(Faith) agreed to pay HUD an administrative payment in the amount of
$8,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where Faith: Failed to adopt, implement and maintain a Quality Control
Plan in compliance with HUD/FHA requirements; and failed to ensure that
its employees worked exclusively for Faith.
8. First Source Financial USA, Incorporated, Las Vegas, NV [Docket No.
06-6009 MR]
Action: On March 26, 2007, First Source Financial USA,
Incorporated, Las Vegas, NV was served with the Government's Complaint
for Civil Money Penalty in the amount of $258,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where First Source Financial USA, Incorporated (First Source):
Submitted false information in loan packages to HUD for HUD/FHA
mortgage insurance; and engaged in prohibited net branching and
prohibited loan origination arrangements.
9. Homewide Lending Corporation, City of Industry, CA [Docket No. 05-
5062-MR]
Action: Settlement Agreement signed October 2, 2006. Without
admitting liability or fault, Homewide Lending Corporation (Homewide)
agreed to pay
[[Page 35251]]
HUD an administrative payment in the amount of $48,000.
Cause: The Board took this action based on the following violations
of HUD/FHA requirements in the origination of HUD/FHA-insured loans
where Homewide: Failed to implement and maintain a Quality Control Plan
in compliance with HUD/FHA requirements (repeat finding); submitted
false and/or conflicting income and employment documentation to
originate HUD/FHA-insured loans; allowed real estate agents to hand-
carry Verification of Employment in violation of HUD/FHA requirements;
violated HUD/FHA third party origination restrictions; and submitted
false gift or budget documentation to originate HUD/FHA-insured loans.
10. Moreland Financial Corporation, Fort Washington, PA [Docket No. 04-
4433-MR]
Action: On January 17, 2007, the Board issued a letter to Moreland
Financial Corporation (Moreland) withdrawing Moreland's FHA-approval.
Cause: The Board took this action because Moreland failed to pay a
civil money penalty in the amount of $22,000 previously imposed by the
Board.
11. Shore Financial Services, Incorporated, Birmingham, MI [Docket No.
06-6017 MR]
Action: Settlement Agreement signed January 24, 2007. Without
admitting liability or fault, Shore Financial Services, Incorporated
(Shore) agreed to pay HUD a civil money penalty in the amount of
$29,500. Shore also agreed to indemnify HUD for any losses on four
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 Shore: Failed to ensure that loans that went into default within
the first six months were reviewed as part of its Quality Control
procedure; failed to document the source of Earnest Money Deposit
funds, or funds to close; failed to document a stable two-year
employment history for the borrowers; failed to ensure that borrower
met the minimum credit requirements; and failed to reconcile
incongruities in appraisals prior to submission to HUD, and/or accepted
incomplete appraisal reports that did not support the final value
consideration.
12. Towne Mortgage and Realty, Sterling Heights, MI [Docket No. 06-
6033-MR]
Action: Settlement Agreement signed February 1, 2007. Without
admitting liability or fault, Towne Mortgage (Towne) agreed to pay HUD
an administrative payment of $26,601.37 ($20,601.37 as indemnification
for two loans and $6,000 as an administrative 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 Towne: Failed to ensure borrowers met minimum credit
requirements; and failed to properly verify borrower's income and/or
stability of income.
13. USA Home Loans, Incorporated, Towson, MD [Docket No. 06-6029-MR]
Action: On January 17, 2007, the Board issued a letter of reprimand
to USA Home Loans, Incorporated (USA Home). The Board also imposed a
civil money penalty in the amount of $2,000.
Cause: The Board took this action because USA Home used misleading
advertising regarding the FHA Single Family Mortgage Insurance Premium
refund program.
Dated: June 14, 2007.
Brian D. Montgomery,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. E7-12374 Filed 6-26-07; 8:45 am]
BILLING CODE 4210-67-P