[Federal Register Volume 77, Number 175 (Monday, September 10, 2012)]
[Notices]
[Pages 55492-55495]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-22126]


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

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5661-N-01]


Mortgagee Review Board: Administrative Actions

AGENCY: Office of the Assistant Secretary for Housing--Federal Housing 
Commissioner, HUD.

ACTION: Notice.

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

SUMMARY: In compliance with section 202(c)(5) of the National Housing 
Act, this notice advises of the cause and description of administrative 
actions taken by HUD's Mortgagee Review

[[Page 55493]]

Board against HUD-approved mortgagees.

FOR FURTHER INFORMATION CONTACT: Nancy A. Murray, Secretary to the 
Mortgagee Review Board, 451 Seventh Street SW., Room B-133/3150, 
Washington, DC, 20410-8000; telephone (202) 708-2224 (this is not a 
toll-free number). Persons with hearing or speech impairments may 
access this number through TTY by calling the toll-free Federal 
Information Service at (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 the Department's Mortgagee Review Board (``Board''). In 
compliance with the requirements of Section 202(c) (5), this notice 
advises of actions that have been taken by the Board from August 1, 
2011 to December 31, 2011.

I. Settlement Agreements, Civil Money Penalties, Withdrawals of FHA 
Approval, Suspensions, Probations, Reprimands, and Administrative 
Payments

1. Euro Mortgage Bankers, Inc., Melville, NY [Docket No. 11-1120-MR]

    Action: On November 30, 2011, the Board issued a Notice of 
Administrative Action permanently withdrawing the FHA approval of Euro 
Mortgage Bankers, Inc. (``EMB'').
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: EMB used falsified and/or 
conflicting information in the origination of HUD/FHA loans; failed to 
ensure loan applications were taken and processed by authorized 
employees; failed to ensure that documents were not handled by an 
interested third party; failed to adequately document the income used 
to qualify the borrower; failed to document the source of funds used 
for the downpayment and/or closing costs; failed to perform quality 
control on all loans that went into default within the first six 
months; and failed to timely submit audited financial statements and 
supplementary reports to HUD.

2. Superior Mortgage Corporation, Hammonton, NJ [Docket No. 11-1177-MR]

    Action: On October 11, 2011, the Board entered into a Settlement 
Agreement with Superior Mortgage Corporation (``Superior'') that 
required Superior to pay a civil money penalty in the amount of 
$10,000, without admitting fault or liability.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: Superior failed to notify the 
Department that it had paid a fine in the amount of $30,000 to the 
Department of Banking of the Commonwealth of Pennsylvania; failed to 
ensure that only principal owners or corporate officers submit the 
annual certification report; and submitted a false certification to HUD 
when it submitted its electronic annual certification for 2011.

3. Town Square Mortgage & Investments, Inc., Frisco, TX [Docket No. 11-
1194-MR]

    Action: On September 20, 2011, the Board entered into a Settlement 
Agreement with Town Square Mortgage & Investments, Inc. (``Town Square 
Mortgage'') that required Town Square Mortgage to pay a civil money 
penalty in the amount of $11,000, without admitting fault or liability.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: Town Square Mortgage submitted 
false audited financial statements to HUD for Fiscal Year ending April 
30, 2010, when it claimed ownership of a residential condominium unit 
located in Apollo Beach, Florida; submitted audited financial 
statements to HUD that were not in conformity with Generally Accepted 
Accounting Principles due to the improper capitalization of a 
residential condominium unit; and displayed the FHA/HUD logo on its Web 
site when promoting its FHA mortgage services.

4. Wall Street Financial Corporation, Fairfield, NJ [Docket No. 11-
1179-MR]

    Action: On November 8, 2011, the Board issued a Notice of 
Administrative Action withdrawing the FHA approval of Wall Street 
Financial Corporation (``WSFC'') for a period of one year.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: WSFC failed to timely submit or 
complete its audited financial statements for its fiscal year ending 
December 31, 2010; failed to pay its annual certification fee; and 
failed to submit its annual certification for 2010.

5. Franklin American Mortgage Company, Franklin, TN [Docket No. 11-
1202-MR]

    Action: On October 4, 2011, the Board entered into a Settlement 
Agreement with Franklin American Mortgage Company (``FAMC'') that 
required FAMC to pay a civil money penalty in the amount of $14,500, 
without admitting fault or liability.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: FAMC failed to notify HUD that 
it paid a fine in the amount of $6,750 to the Department of Banking of 
the Commonwealth of Pennsylvania to resolve allegations that FAMC had 
violated the Mortgage Licensing Act, and submitted a false 
certification to HUD when it submitted it electronic annual 
certification for 2011.

6. Midland Mortgage Co., Oklahoma City, OK [Docket No. 10-1999-MR]

    Action: On November 23, 2011, the Board entered into a Settlement 
Agreement with Midland Mortgage Company (``MMC'') that required MMC, 
without admitting fault or liability, to pay a civil money penalty in 
the amount of $1,300,000 and to pay all outstanding mortgage insurance 
premiums owed to HUD.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: MMC failed to remit mortgage 
insurance premiums to HUD/FHA on 3,438 loans, and failed to notify HUD/
FHA within fifteen (15) days of the termination of 2,488 contracts for 
mortgage insurance.

7. UnionFederal Mortgage Corporation, Nanuet, NY [Docket No. 11-1205-
MR]

    Action: On November 30, 2011, the Board issued a Notice of 
Administrative Action withdrawing the FHA approval of UnionFederal 
Mortgage Corporation (``UFMC'') for a period of one year.
    Cause: The Board took this action based on the following violation 
of HUD/FHA requirements alleged by HUD: UFMC failed to notify HUD that 
it voluntarily surrendered its license to the New York State Banking 
Department on or about October 20, 2010.

8. Vanguard Funding, LLC, Garden City, NY [Docket No. 11-1102-MR]

    Action: On November 28, 2011, the Board entered into a Settlement 
Agreement with Vanguard Funding, LLC (``VF'') that required VF, without 
admitting fault or liability, to pay a civil money penalty in the 
amount of $101,500, to indemnify HUD against losses relating to five 
(5) FHA-insured loans for a period of five (5) years from the date of 
the Settlement Agreement, and to require third party training for its 
underwriters.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by

[[Page 55494]]

HUD: VF failed to notify HUD within ten (10) business days that it was 
the subject of two state enforcement actions prohibiting it from 
originating mortgages; VF originated six (6) FHA-insured mortgages in 
the state of New York while it was the subject of an order from the 
state of New York suspending its mortgage banker license; VF permitted 
a non-FHA approved mortgage broker to perform loan origination services 
on two (2) FHA-insured loans; VF approved three (3) loans for borrowers 
who were ineligible for federally insured mortgages due to outstanding 
delinquent federal debt; VF approved two (2) FHA-insured loans without 
adequately documenting the income used to qualify the borrowers; VF 
approved three (3) FHA-insured loans without resolving discrepancies in 
the loan files relating to the borrowers' income and employment; VF 
failed to document the source of gift funds on three (3) FHA-insured 
loans; VF approved a loan when the borrower did not meet the minimum 
credit requirements; VF approved one loan where it omitted a liability 
of the borrower in the underwriting analysis; VF accepted three (3) 
loan applications from loan correspondents for which VF was not an FHA 
approved Sponsor; and VF failed to review five (5) FHA-insured loans 
that went into early payment default within the first six (6) months of 
repayment.

9. Wells Fargo Bank, N.A., Minneapolis, MN [Docket No. 11-1183-MR]

    Action: On December 20, 2011, the Board issued a letter of 
reprimand to Wells Fargo Bank, N.A. (``Wells Fargo'').
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: Wells Fargo failed to comply 
with property preservation and protection requirements on two (2) HUD-
insured homes following foreclosure.

10. MetLife Bank, N.A., Bridgewater, NJ [Docket No. 11-1148-MR]

    Action: On December 12, 2011, the Board entered into a Settlement 
Agreement with MetLife Bank, N.A. (``MetLife'') that required MetLife, 
without admitting fault or liability, to pay an administrative payment 
in the amount of $41,250 and waive all insurance benefits or indemnify 
HUD against any losses relating to eleven (11) FHA-insured mortgages 
for a period of five (5) years from the date of the Settlement 
Agreement.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements self-reported by MetLife: MetLife violated HUD/
FHA requirements when it approved eleven (11) FHA-insured loans without 
identifying irregularities and resolving discrepancies and conflicting 
information in the loan files; MetLife violated HUD/FHA requirements on 
six (6) FHA-insured loans when it failed to adequately document the 
borrowers' income; MetLife violated HUD/FHA requirements when it 
approved four (4) FHA-insured loans after failing to ensure that 
documents were not handled by an interested third party; MetLife 
violated HUD/FHA requirements on four (4) FHA-insured transactions when 
it failed to document the source of funds used for the borrowers' down- 
payments and/or closing costs; MetLife violated HUD/FHA requirements 
when it approved three (3) FHA-insured loans and omitted monthly debt 
obligations from its underwriting analysis; MetLife violated HUD/FHA 
requirements when it approved an FHA-insured loan for a borrower who 
was ineligible because of an outstanding court-ordered judgment; 
MetLife violated HUD/FHA requirements when it approved a loan for FHA 
mortgage insurance without ensuring the borrower met the statutory 3.5% 
minimum investment requirement; and MetLife violated HUD/FHA 
requirements when it approved a loan for a borrower that was over-
insured by $3,598.54, because it had failed to consider the seller's 
inducement to purchase.

11. Reliance First Capital, LLC Melville, NY [Docket No. 11-1203-MR]

    Action: On December 22, 2011, the Board entered into a Settlement 
Agreement with Reliance First Capital, LLC (``Reliance'') that required 
Reliance to pay a civil money penalty in the amount of $11,000, without 
admitting fault or liability.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: Reliance failed to notify HUD 
that it agreed to pay a fine in the amount of $5,000 to the Department 
of Banking of the Commonwealth of Pennsylvania, and submitted a false 
certification to HUD when it submitted its electronic annual 
certification for 2011.

12. Virginia Commonwealth Bank, Petersburg, VA [Docket No. 11-1273-MR]

    Action: On December 8, 2011, the Board entered into a Settlement 
Agreement with Virginia Commonwealth Bank (``VCB'') that required VCB, 
without admitting fault or liability, to pay a civil money penalty in 
the amount of $6,725 and to remit all outstanding mortgage insurance 
premiums and late fees owed to HUD.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: VCB failed to timely remit 
mortgage insurance premiums on forty-four (44) loans.

13. E Mortgage Management, LLC, Haddon Township, NJ [Docket No. 11-
1200-MR]

    Action: On February 3, 2012, the Board entered into a Settlement 
Agreement with E Mortgage Management, LLC (``EMM'') that required EMM 
to pay a civil money penalty in the amount of $14,500, without 
admitting fault or liability.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: EMM failed to notify HUD that 
EMM agreed to pay a fine in the amount of $61,500 to the Department of 
Banking of the Commonwealth of Pennsylvania, and submitted a false 
certification to HUD when it submitted its electronic Annual 
Certifications for 2011.

14. Master Mortgage Corporation, Bayamon, PR [Docket No. 11-1147-MR]

    Action: On February 3, 2012, the Board issued a Notice of 
Administrative Action withdrawing the FHA approval of Master Mortgage 
Corporation (``MMC'') for five years.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: MMC failed to timely submit 
audited financial statements and supplementary reports to HUD, and 
failed to notify HUD that MMC and MMC's President were issued a 
Complaint and Cease and Desist Order from the Commissioner of Financial 
Institutions of Puerto Rico that required MMC to pay fines totaling 
$280,000, ordered MMC to permanently cease and desist from operating 
and engaging in the business of a mortgage institution in Puerto Rico, 
required MMC to immediately surrender its mortgage institution's 
license, and barred MMC's president from serving as an officer, 
director, or owner of any financial institution.

15. Clarion Mortgage Capital, Inc., Greenwood Village, CO [Docket No. 
10-1798-MR]

    Action: On February 23, 2011, the Board entered into a Settlement 
Agreement with Clarion Mortgage Capital, Inc. (``Clarion'') that 
required Clarion to pay a civil money penalty in the amount of $45,000, 
without admitting fault or liability.

[[Page 55495]]

    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: Clarion failed to comply with 
HUD's quality control requirements; violated HUD's mortgagee employee 
and staffing requirements; and charged unallowable and unsupported 
fees.

16. PHH Home Loans, LLC, Mount Laurel, NJ [Docket No. 11-1201-MR]

    Action: On February 15, 2012, the Board entered into a Settlement 
Agreement with PHH Home Loans, LLC (``PHH'') that required PHH to pay a 
civil money penalty in the amount of $14,500, without admitting fault 
or liability.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: PHH failed to notify HUD that 
PHH agreed to pay a fine of $11,750 to the Department of Banking of the 
Commonwealth of Pennsylvania; failed to notify HUD that it paid a fine 
of $50,000 to the Illinois Department of Financial and Professional 
Regulation; and submitted a false certification to HUD when it 
submitted its electronic annual certification for 2011.

17. HomeState Mortgage Company, LLC, Anchorage, AK [Docket No. 11-1286-
MR]

    Action: On April 3, 2012, the Board entered into a Settlement 
Agreement with HomeState Mortgage Company, LLC (``HMC'') that required 
HMC, without admitting fault or liability, to pay a civil money penalty 
in the amount of $15,000 and to complete a six-month period of 
probation, during which time HMC must submit all marketing materials to 
HUD on a quarterly basis for review and approval.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: HMC reproduced the official HUD 
seal on an advertisement or business solicitation, and disseminated a 
misrepresentative or misleading advertisement or business solicitation 
to the public.

18. United Northern Mortgage Bankers, LTD, Levittown, NY [Docket No. 
11-1149-MR]

    Action: On March 16, 2012, the Board entered into a Settlement 
Agreement with United Northern Mortgage Bankers LTD (``UNMB'') that 
required UNMB, without admitting fault or liability, to pay a civil 
money penalty in the amount of $25,000, indemnify HUD against losses 
relating to two FHA-insured loans for a period of five years, and 
complete a six-month period of probation during which time UNMB must 
submit the results of its monthly QC audits and certifications as to 
its QC staffing and operations.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: UNMB failed to ensure that the 
quality control reviews for early payment defaults were completed; used 
conflicting information in originating and obtaining HUD/FHA mortgage 
insurance; and failed to adequately document the stability of income 
used to qualify the borrowers.

19. Fifth Third Bank, Cincinnati, OH [Docket No. 10-1998-MR]

    Action: On April 27, 2012, the Board entered into a Settlement 
Agreement with Fifth Third Bank (``Fifth Third'') that required Fifth 
Third to pay a civil money penalty in the amount of $700,000, without 
admitting fault or liability.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: Fifth Third failed to timely 
remit mortgage insurance premiums to HUD/FHA, and failed to notify HUD/
FHA within 15 calendar days of the termination, transfer or sale of 
mortgage insurance contracts.

II. Lenders That Failed To Timely Meet Requirements for Annual 
Recertification of HUD/FHA Approval

    Action: The Board entered into settlement agreements with the 
lenders listed below, which required the lender to pay a $7,500 or 
$3,500 civil money penalty, without admitting fault or liability.
    Cause: The Board took this action based upon allegations that the 
lenders listed below failed to comply with the Department's annual 
recertification requirements in a timely manner.
    1. Anchor Funding Corporation, Norcross, GA ($7,500.00) [Docket No. 
11-1225-MRT]
    2. Freyre Mortgage Corp., San Juan, PR. ($3,500.00) [Docket No. 11-
1229-MRT]

III. Lenders That Failed To Meet Requirements for Annual 
Recertification of HUD/FHA Approval

    Action: The Board voted to withdraw the FHA approval of each of the 
lenders listed below for a period of one year.
    Cause: The Board took this action based upon allegations that the 
lenders listed below were not in compliance with the Department's 
annual recertification requirements.
    1. First Home Mortgage, Inc., Jonesboro, AR [Docket No. 12-1642-
MRT].
    2. HCL Finance Inc., San Jose, CA [Docket No. 12-1641-MRT].
    3. Ikon Mortgage Lenders, Inc., Fort Lauderdale, FL [Docket No. 09-
9910-MRT].
    4. Delta Home and Lending, Inc., Sacramento, CA [Docket No.12-1643-
MRT].
    5. Axiom Mortgage Bankers Corporation, Irvine, CA [Docket No. 11-
1234-MRT].
    6. Red Rock Mortgage & Lending, LLC., Oklahoma City, OK [Docket No. 
11-1233-MRT].

    Dated: August 31, 2012.
Carol J. Galante,
Acting Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 2012-22126 Filed 9-7-12; 8:45 am]
BILLING CODE 4210-67-P