HUD Alleges Further Mortgagee Violations

Posted by Orb Staff on November 06, 2009 No Comments
Categories : Residential Mortgage

The Department of Housing and Urban Development's (HUD) Mortgagee Review Board (MRB) has again taken action against lenders, this time imposing civil money penalties on two lenders in Wisconsin and Connecticut.

Green Bay, Wis.-based 1st Rate Mortgage Corp., a non-supervised loan correspondent, violated the agency's third-party origination restrictions, made false certifications concerning the compliance with these restrictions and failed to maintain a quality control plan in accordance with HUD/FHA requirements, the MRB alleges. The MRB voted to impose civil money penalties equaling $20,000.

Access Mortgage Corp., a non-supervised direct endorsement mortgagee based in New Haven, Conn., allegedly violated HUD/FHA requirements by improperly using the official FHA logo and failing to notify HUD of a change in its doing-business-as name. The HUD board voted to impose penalties totaling $7,000.

Each lender will have an opportunity to challenge the imposition of civil money penalties and seek a hearing before an administrative law judge.

"There should be no doubt about the message we're sending to our lenders," says FHA Commissioner David Stevens. "FHA standards are there for a reason, and we expect our lenders to follow them or pay the consequences."

In addition, the MRB reached tentative settlements with four other lenders and issued two letters of reprimand to lenders stating that HUD alleged violated FHA requirements.

Irvine, Calif.-based Nations Direct Mortgage has agreed to pay $3,500 in penalties relating to HUD's allegation that the lender used the official HUD seal in a contract posted to its Web site.

VanDyk Mortgage Corp., Grand Rapids, Mich., allegedly failed to properly document a borrower's income and failed to ensure that an employee did not participate in the origination of her own FHA-insured mortgage. The company has agreed to pay a penalty of $7,500 and indemnify HUD against losses in the two loans at issue.

US Bank, a Minneapolis-headquarted federal savings bank and Ginnie Mae issuer, has agreed to settle allegations that it violated HUD/FHA requirements in the submission of documentation necessary for HUD to process a claim on a multifamily insured property. HUD had alleged that US Bank's failure to provide necessary documentation delayed the resale of the foreclosed property and the department's mitigation of the FHA fund's losses in connection with the claim. US Bank has agreed to make an administrative payment of $37,500 to resolve the matter.

Sun West Mortgage Co. Inc., a non-supervised loan correspondent in Cerritos, Calif., allegedly originated 10 Home Equity Conversion Mortgages (HECMs) in Massachusetts before receiving the necessary license and approval to originate the loan products in that state and failed to notify HUD that Massachusetts had issued a cease-and-desist order prohibiting it from the unlicensed origination of loans in that jurisdiction. Sun West has agreed to pay $10,000 and accept a letter of reprimand to resolve the matter.

The MRB also issued a letter of reprimand issued to Community Lender Inc. of Boise, Idaho. HUD alleged that Community failed to notify HUD that it had lost its license in the state of Idaho. A letter of reprimand was deemed appropriate, because the revocation of Community's license occurred as a result of the lapsing of its surety bond for a period of two weeks, and the lender has provided evidence that the problem was immediately corrected.

SOURCE: Department of Housing and Urban Development

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