[Federal Register Volume 84, Number 84 (Wednesday, May 1, 2019)]
[Notices]
[Pages 18565-18568]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-08851]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-6163-N-01]


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)(5) 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: 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 HUD'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 in its meetings from October 
1, 2017 to November 14, 2018.

I. Civil Money Penalties, Withdrawals of FHA Approval, Suspensions, 
Probations, and Reprimands

1. American Eagle Mortgage Company, LLC Lorain, Ohio [Docket No. 17-
1859]

    Action: On October 27, 2017, the Board voted to accept a settlement 
agreement with American Eagle Mortgage Company, LLC (``American 
Eagle'') that required American Eagle to pay a civil money penalty in 
the amount of $11,650 and to refrain from making any claim for 
insurance benefits and/or indemnify FHA for all losses associated with 
one FHA insured loan. The settlement did not constitute an admission of 
liability or fault.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: American Eagle failed to (a) 
calculate properly the maximum mortgage amount for a mortgage loan 
submitted for endorsement; (b) pay upfront mortgage insurance premiums 
to HUD for forty-seven FHA insurance mortgages within ten days of 
closing or the disbursement date; and (c) remit timely periodic 
mortgage insurance premiums to HUD or notify HUD within fifteen 
calendar days of the termination of the contract of mortgage insurance 
or of the sale of the mortgage loan for fourteen FHA insured loans.

2. American Financial Network, Inc., Brea, CA [Docket No. 17-1833-MR]

    Action: On April 26, 2018, the Board voted to accept a settlement 
agreement with American Financial Network, Inc. (``AFN'') that required 
AFN to pay a civil money penalty in the amount of $282,000 and to 
refrain from making any claim for insurance benefits and/or indemnify 
FHA for all losses associated with thirty-three FHA insured loans. The 
settlement did not constitute an admission of liability or fault.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: AFN (a) employed an excluded 
party as a branch manager contemporaneous with that branch manager 
being subject to a five-year debarment; (b) failed to timely notify FHA 
both of a June 21, 2016 settlement with and imposition of sanctions by 
the Commonwealth of Virginia, State Corporation Commission, 
Commissioner of Financial Institutions and of a June 21, 2016 
settlement with and imposition of sanctions by the Ohio Department of 
Commerce, Division of Financial Institutions, Consumer Finance Section 
in June 21, 2016; and (c) falsely certified to HUD that 33 loans 
originated during the period of the debarred branch manager's 
employment were eligible for FHA insurance.

3. Bank34, Alamogordo, NM [Docket No. 17-1843-MR]

    Action: On April 26, 2018, the Board voted to accept a settlement 
agreement with Bank34 that required Bank34 to pay a civil money penalty 
in the amount of $8,500 and to refrain from making any claim for 
insurance benefits and/or indemnify FHA for all losses associated with 
one FHA insured loan. The settlement did not constitute an admission of 
liability or fault.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: Bank34 (a) failed to comply 
with a ``case warning'' prior to endorsing a loan for FHA insurance; 
and (b) fraudulently misrepresented that a loan had been manually 
underwritten by Bank34 when such underwriting was a condition for 
endorsement.

4. Berkshire Bank, Pittsfield, MA [Docket No. 17-1894-MRT]

    Action: On April 26, 2018, the Board voted to accept a settlement 
agreement with Berkshire Bank (``Berkshire'') that required Berkshire 
to pay a civil money penalty in the amount of $28,559. Contemporaneous 
with this action, the Board voted to withdraw for one year

[[Page 18566]]

the FHA approval of First Choice Bank (``First Choice''), for which 
Berkshire was a successor-in-interest. The settlements did not 
constitute admissions of liability or fault.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: (a) On December 2, 2016, First 
Choice merged into Berkshire; however, both Berkshire and First Choice 
failed to notify FHA timely of the merger between the entities; and (b) 
in October 2017, Berkshire acquired, an entity that was not FHA 
approved, and Berkshire failed to notify FHA timely of the merger 
between the entities.

5. CrossCountry Mortgage, Inc., Brecksville, OH [Docket No. 17-1844-MR]

    Action: On April 26, 2018, the Board voted to accept a settlement 
agreement with CrossCountry Mortgage, Inc. (``CrossCountry'') that 
required CrossCountry to pay a civil money penalty in the amount of 
$71,904. The settlement did not constitute an admission of liability or 
fault.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: (a) CrossCountry failed to 
notify FHA timely of both a March 25, 2013 consent order with and 
imposition of sanctions by the Commonwealth of Kentucky and an October 
21, 2013 settlement agreement with and imposition of sanctions by the 
State of Division of Financial Institutions for the Ohio Department of 
Commerce; (b) CrossCountry submitted a false certification for fiscal 
year ended December 31, 2013; (c) CrossCountry failed to notify FHA 
timely of unresolved findings during fiscal year ended December 31, 
2014; (d) CrossCountry submitted a false certification for fiscal year 
ended December 31, 2014; (e) CrossCountry failed to notify FHA timely 
of a January 14, 2015 Consent Order with and imposition of sanctions by 
the Commonwealth of Massachusetts; (f) CrossCountry submitted a false 
certification for fiscal year ended December 31, 2015; (g) CrossCountry 
failed to notify FHA timely of an October 26, 2016 Consent Order with 
and impositions of sanctions by the State of California Department of 
Business Oversight; (h) CrossCountry submitted a false certification 
for the fiscal year ending on December 31, 2016; and (i) CrossCountry 
failed to notify FHA timely of a February 6, 2017 Cease and Desist 
Order with and imposition of sanctions by the State of Oregon, Division 
of Financial Regulation.

6. Finance of America Mortgage, LLC, Horsham, PA [Docket No.17-1845-MR]

    Action: On April 26, 2018, the Board voted to accept a settlement 
agreement with Finance of America Mortgage, LLC (``Finance of 
America'') that required Finance of America to pay a civil money 
penalty in the amount of $4,500. The settlement did not constitute an 
admission of liability or fault.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: Finance of America failed to 
notify FHA timely of an October 10, 2016 consent order with and 
imposition of sanctions by the Commonwealth of Kentucky Department of 
Financial Institutions.

7. Finance of America Mortgage, LLC, Horsham, PA [16-cv-750 (N.D.N.Y.)]

    Action: On September 28, 2018, the Board voted to accept a 
settlement agreement between the United States and Finance of America 
in which Finance of America paid the United States $14.5 million. The 
settlement did not constitute an admission of liability or fault.
    Cause: The Board took this action based on the following alleged 
violations of HUD/FHA requirements: The fraudulent submission of 
ineligible loans for FHA insurance and the failure to comply with FHA 
quality control and self-reporting requirements.

8. Frandsen Bank and Trust, New Ulm, MN [Docket No. 17-1855-MR]

    Action: On April 26, 2018, the Board voted to accept a settlement 
agreement with Frandsen Bank and Trust (``Frandsen'') that required 
Frandsen to pay a civil money penalty in the amount of $4,500. The 
settlement did not constitute an admission of liability or fault.
    Cause: The Board took this action based on the following violation 
of HUD/FHA requirements alleged by HUD: Frandsen failed to notify FHA 
timely of its March 31, 2016 merger with another lender.

9. Freedom Mortgage Corporation, Mount Laurel, NJ [Docket No. 17-1851-
MR]

    Action: On April 26, 2018, the Board voted to accept a settlement 
agreement with Freedom Mortgage Corporation (``Freedom'') that required 
Freedom to pay a civil money penalty in the amount of $40,000. The 
settlement did not constitute an admission of liability or fault.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: (a) Freedom failed to notify 
FHA timely of both an August 15, 2015 Consent Order with and imposition 
of sanctions by the State of Oklahoma Department of Consumer Credit and 
a September 23, 2015 Cease and Desist Order with and imposition of 
sanctions by the Texas Department of Savings and Mortgage Lending; (b) 
Freedom violated lender approval and annual recertification 
requirements in 2016 by falsely certifying that it had not been 
sanctioned; and (c) Freedom failed to notify FHA timely of a January 
26, 2016 Settlement Order with and the imposition of sanctions by the 
Commonwealth of Virginia Bureau of Financial Institutions, a March 5, 
2016 agreement with and imposition of sanctions by the State of 
Tennessee Department of Financial Institutions, an April 15, 2016 
settlement with and the imposition of sanctions by the U.S. Department 
of Justice, and a July 26, 2016 settlement agreement with and 
imposition of sanctions by the State of Ohio Department of Commerce.

10. Golden Empire Mortgage, Inc., Bakersfield, CA [Docket No. 17-1847-
MR]

    Action: On April 26, 2018, the Board voted to accept a settlement 
agreement with Golden Empire Mortgage, Inc. (``GEM'') that required GEM 
to pay a civil money penalty in the amount of $8,500. The settlement 
did not constitute an admission of liability or fault.
    Cause: The Board took this action based on the following violation 
of HUD/FHA requirements alleged by HUD: GEM failed to notify FHA timely 
that it entered into a February 16, 2016 letter agreement with the 
State of Hawaii Division of Financial Institutions.

11. IberiaBank FSD, Lafayette, LA [Docket No. 15-1903-MR]

    Action: On October 27, 2017, the Board voted to accept a settlement 
agreement between the United States and Iberia Bank FSD 
(``IberiaBank'') in which IberiaBank paid the United States 
$11,692,149. The settlement did not constitute an admission of 
liability or fault.
    Cause: The Board took this action based on the following alleged 
violations of HUD/FHA requirements: the fraudulent submission of 
ineligible loans for FHA insurance, the failure to comply with FHA 
quality control and self-reporting requirements, and

[[Page 18567]]

prohibited commission payments to underwriters.

12. Liberty Home Equity Solutions, Inc, Rancho Cordova, CA [Docket No. 
17-1856-MR]

    Action: On April 26, 2018, the Board voted to accept a settlement 
agreement with Liberty Home Equity Solutions, Inc. (``Liberty'') that 
required Liberty to pay a civil money penalty in the amount of $4,500. 
The settlement did not constitute an admission of liability or fault.
    Cause: The Board took this action based on the following violation 
of HUD/FHA requirements alleged by HUD: Liberty failed to notify FHA 
timely of an August 11, 2016 Agreed Order with and imposition of 
sanctions by the Department of Financial Institutions of the 
Commonwealth of Kentucky.

13. Movement Mortgage, LLC, Virginia Beach, VA [Docket No. 17-1832-MR]

    Action: On August 15, 2018, the Board voted to accept a settlement 
agreement with Movement Mortgage, LLC (``Movement'') that required 
Movement to pay a civil money penalty in the amount of $299,750 and to 
refrain from making any claim for insurance benefits and/or indemnify 
FHA for all losses associated with eighteen FHA insured loans. The 
settlement did not constitute an admission of liability or fault.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: Movement failed to (a) obtain 
necessary documentation for source and adequacy of borrower funds; (b) 
identify and resolve discrepancies and/or irregularities in the 
documentation used to approve a loan; (c) consider all of a borrower's 
liabilities and potential liabilities during underwriting; (d) document 
adequately a borrower's income and stability of income; (e) ensure that 
the subject property met the Minimum Property Requirements or 
Standards; (f) ensure that the property was the borrower's principal 
residence; (g) ensure the borrower's eligibility for an FHA insured 
loan; (h) ensure that documents used to underwrite the loan were dated 
not in excess of 120 days; (i) comply with HUD Quality Control 
requirements; and (j) report to HUD material findings revealed to 
Movement during its Quality Control review.

14. Seckel Capital LLC, Newtown, PA [Docket No. 17-1986-MR]

    Action: On April 26, 2018, the Board authorized the filing of civil 
money penalty complaint and the permanent withdrawal of Seckel Capital 
LLC's (``Seckel'') FHA approval.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: Seckel (a) violated HUD 
requirements by submitting fraudulent audited financial statements for 
fiscal year 2012; (b) violated HUD requirements by submitting 
fraudulent audited financial statements for fiscal year 2013; (c) 
violated HUD requirements by submitting a false certification for 
fiscal year 2013; (d) violated HUD requirements by submitting 
fraudulent audited financial statements for fiscal year 2014; (e) 
violated HUD requirements by submitting a false certification for 
fiscal year 2014; (f) violated HUD requirements by submitting 
fraudulent Audit Financial Statements for fiscal year 2015; (g) 
violated HUD requirements by submitting a false certification to HUD 
for fiscal year 2015; (h) violated HUD's requirements by failing to 
remit the Upfront Mortgage Insurance Premiums for 83 FHA insured loans 
within ten calendar days from 2015 through 2017; (i) allowing an 
employee to engage in dual employment without determining that such 
dual employment did not create a prohibited conflict of interest and 
failing to designate as the officer in charge a full-time corporate 
officer; and (j) submitting 1,040 FHA loans for insurance that were not 
eligible for FHA insurance.

15. Secure One Capital Corporation, d/b/a The Lending Leader Newport 
Beach, Ca [Docket No. 17-1837-MR]

    Action: On August 15, 2018, the Board voted to accept a settlement 
agreement with Secure One Capital Corporation (``Secure'') that 
required Secure to pay a civil money penalty in the amount of $27,436. 
The settlement did not constitute an admission of liability or fault.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: Secure (1) violated the 
underwriting guidelines for FHA insured refinance mortgage by failing 
to (a) obtain and retain in the case binder AUS Feedback Certificate; 
(b) document properly a satisfactory payment history for the borrower's 
existing mortgage; (c) include the initial URLA and 92900-A in the case 
binder; and (d) ensure that the subject property met HUD's minimum 
property requirements; and (2) (a) failed to maintain a minimum 
adjusted net worth in fiscal year 2016, (b) failed to notify HUD timely 
of any adjusted net worth deficiency during fiscal year 2016, (c) 
falsely certified that it was in compliance with all requirements for 
fiscal year 2016 when it filed for its annual recertification of FHA 
approval.

16. Specialized Loan Servicing, L.L.C., Highlands Ranch, CO [Docket No. 
17-0849-MR]

    Action: On April 26, 2018, the Board voted to accept a settlement 
agreement with Specialized Loan Servicing, L.L.C. (``SLS'') that 
required SLS to pay a civil money penalty in the amount of $13,000. The 
settlement did not constitute an admission of liability or fault.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: SLS failed to notify FHA timely 
of (a) a November 5, 2015 Settlement Agreement with and the imposition 
of sanctions by the State of Michigan Department of Insurance and 
Financial Services; and (b) a March 21, 2016 Settlement Agreement with 
and imposition of sanctions by the State of Hawaii Division of 
Financial Institutions.

17. Vinson Mortgage Services, Inc., St. Louis, MO [Docket No. 17-0849-
MR]

    Action: On March 15, 2016, the Board issued a Notice of 
Administrative Action through which it involuntarily withdrew for one-
year the FHA approval of Vinson Mortgage Services, Inc. (``Vinson 
Mortgage''). On January 9, 2018, through an Order on Secretarial 
Review, HUD affirmed the Board's one-year involuntary withdrawal of 
Vinson Mortgage. Vinson Mortgage's subsequent challenge in Federal 
court of its withdrawal ended with a November 2018 settlement agreement 
in which Vinson Mortgage agreed to a two-year withdrawal of its FHA 
approval and to a civil money penalty payment of $100,000. The 
settlement did not constitute an admission of liability or fault.
    Cause: The Board took this action based on the following violation 
of HUD/FHA requirements alleged by HUD: Vinson Mortgage failed to meet 
the requirements for annual recertification of HUD/FHA approval.

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

    Action: The Board entered into settlement agreements with the 
following lenders, which required the lender to pay a civil money 
penalty without admitting fault or liability.
    Cause: The Board took these actions based upon allegations that the 
listed

[[Page 18568]]

lenders failed to comply with HUD's annual recertification requirements 
in a timely manner.

1. American Lending, Costa Mesa, CA, ($4,500) [Docket No. 17-1901-MRT]
2. American Mortgage Company, North Platte, NE ($4,500) [Docket No. 17-
1877-MRT]
3. Bank of the Rockies N.A., White Sulphur Spring, MT ($4,500) [Docket 
No. 17-1887-MRT]
4. Citizens Trust Bank, Atlanta, GA ($9,468) [Docket No. 17-1981-MRT]
5. Columbia Bank, Lake City, FL ($4,500) [Docket No. 17-1921-MRT]
6. Cross River Bank, Teaneck, NJ ($9,468) [Docket No. 17-1909-MRT]
7. Denali Federal Credit Union, Anchorage, AK ($4,500) [Docket No. 17-
1984-MRT]
8. First Commerce Credit Union, Tallahassee, FL ($4,500) [Docket No. 
17-1721-MRT]
9. FirstCity Bank of Commerce, Palm Beach Gardens, FL ($9,623) [Docket 
No. 18-1838-MRT]
10. Home Federal Savings and Loan, Grand Island, NE ($4,500) [Docket 
No. 17-2004-MRT]
11. Legends Bank, Clarksville, TN ($9,468) [Docket No. 17-1910-MRT]
12. LenderLive Network, LLC, Denver, CO ($4,500) [Docket No. 17-1977-
MRT]
13. Lyons Federal Bank, Lyons, KS ($4,500) [Docket No. 17-1730-MRT]
14. Midwest Regional Bank, Festus, MO ($4,500) [Docket No. 17-1874-MRT]
15. Pinnacle Federal Credit Union, Edison, NJ ($4,500) [Docket No. 17-
1978-MRT]
16. Prime Mortgage Lending Inc., Apex, NC ($4,500) [Docket No. 17-1897-
MRT]
17. Progressive National Bank of De Soto, Mansfield, LA ($4,500) 
[Docket No. 17-1892-MRT]
18. Service First Federal Credit Union, Sioux Falls, SD ($4,500) 
[Docket No. 17-1719-MRT]
19. SouthStar Bank, Moulton, TX ($4,500) [Docket No. 17-1867-MRT]
20. Thompson Kane & Company, LLC, Madison, WI ($4,500) [Docket No. 17-
1888-MRT]
21. US Home Capital LLC, East Brunswick, NJ ($9,468) [Docket No. 17-
1879-MRT]
22. Waterford Bank NA, Toledo, OH ($4,500) [Docket No. 17-1905-MRT]
23. Wendover Financial Services, Greensboro, NC ($9,648) [Docket No. 
17-1854-MRT]
24. Western National Bank Cass Lake, Cass Lake, MN ($4,500) [Docket No. 
17-1920-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 (1) year.
    Cause: The Board took this action based upon allegations that the 
lenders listed below were not in compliance with HUD's annual 
recertification requirements.

1. Full Access Mortgage Inc., La Vista, NE [Docket No. 18-1865-MRT]
2. Guaranty Bank FSB, Brown Deer, WI [Docket No. 19-1903-MRT]
3. Key Mortgage Company Inc., Columbia, KY [Docket No. 17-1882-MRT]
4. Mortgage Enterprise LTD, Carle Place, NY [Docket No. 19-1904-MRT]
5. Proficio Bank, Cottonwood Heights, UT [Docket No. 19-1905-MRT]
6. Ukranian Selfreliance Federal Credit Union, Philadelphia, PA [Docket 
No. 19-1906-MRT]
7. Urban Fulfillment Services, LLC., Highlands Ranch, CO [Docket No. 
19-1907-MRT]

    Dated: April 18, 2019.
Brian Montgomery,
Assistant Secretary for Housing/FHA Commissioner, Chairman, Mortgagee 
Review Board.
[FR Doc. 2019-08851 Filed 4-30-19; 8:45 am]
 BILLING CODE 4210-67-P