HUD issues sanctions against 120 FHA lenders

HUD issues sanctions against 120 FHA lenders

WASHINGTON – May 22, 2009 – The U.S. Department of Housing and Urban Development’s (HUD) Mortgagee Review Board announced actions against more than 120 lenders for violating FHA requirements. Violations include a failure to conduct sufficient quality control, failure to continue to meet FHA recertification requirements and falsifying loan documents.

The Helping Families Save Their Homes Act signed yesterday by President Obama grants FHA more oversight authority and provides additional enforcement tools to police lenders who employ false or misleading marketing tactics. In addition, the fiscal year 2010 budget proposal seeks additional investments in FHA to curb fraud and abuse, including enhanced investments in technology, staffing and training to enable FHA to cope with the rising volume of mortgage business, detect fraud, and monitor lenders and appraisers.

“We expect, and more importantly American homebuyers deserve, that when they deal with an FHA-approved lender, they’re dealing with a lender they can trust,” says HUD Secretary Shaun Donovan.

The Board may issue letters of reprimand, suspend FHA lending approval, put a lender on probation, withdraw FHA approval, or charge civil money penalties. Among the actions announced today, 102 lenders had their FHA approval withdrawn, five lenders agreed to make indemnification payments to FHA totaling more than $500,000, and 24 lenders were accessed fines or administrative costs totaling more than $1.2 million.

HUD’s actions result from standard compliance reviews of FHA-approved lenders. HUD’s four Home Ownership Centers conduct a majority of the reviews. Serious violations are referred to the Mortgagee Review Board, with board actions reported quarterly in the Federal Register.

Florida lenders receiving a sanction include:

• Epic Funding Group, Inc., Brandon: Civil penalty of $3,500 and six months probation
• Mission Mortgage Corp., Miramar: Civil penalty of $12,000 and withdrawal of FHA/HUD approval for five years
• Mortgage Investors Corp., St. Petersburg: Agreed to waive insurance benefits or indemnify HUD for losses from 22 HUD/FHA-insured mortgages for a period of five years from the endorsement date
• WCS Lending LLC, Boca Raton: Civil penalty of $3,500 and six months probation
• Amerimortgage Bankers LLC, Miami: HUD/FHA approval withdrawn for one year
• Collins Financial Group Inc., Lake City: HUD/FHA approval withdrawn for one year
• Financial Funding Services Inc., Coral Gables: HUD/FHA approval withdrawn for one year
• Gibraltar Mortgage LLC, Jacksonville: HUD/FHA approval withdrawn for one year
• IFG Mortgage LLC, Coral Gables: HUD/FHA approval withdrawn for one year
• S and L Capital Group, Sarasota: HUD/FHA approval withdrawn for one year
• STS Capital Holding Inc., Tampa: HUD/FHA approval withdrawn for one year
• The Loan Office Inc., Fort Lauderdale: HUD/FHA approval withdrawn for one year
• Eastern Financial Home Loans Corp., Hialeah: HUD/FHA approval withdrawn for one year

For more information, including HUD’s reason for the each sanction, the notice in the Federal Register may be downloaded (PDF format) at: (http://edocket.access.gpo.gov/2009/pdf/E9-9731.pdf)

© 2009 FLORIDA ASSOCIATION OF REALTORS®