FHA-approved lender faulted for poor underwriting and false certifications
WASHINGTON – The Federal Housing Administration (FHA) today withdrew the FHA approval of Ideal Mortgage Bankers, doing business as Lend America and Lending Key (“Ideal”). The action is effective immediately and prevents Ideal from originating and underwriting new FHA-insured mortgages or from participating in the FHA single family insurance program. In addition, the Government National Mortgage Association (Ginnie Mae) defaulted Lend America. Effective immediately, Lend America will no longer be able to issue Ginnie Mae securities.
FHA also imposed civil money penalties against Ideal in the amount of $512,500. The U.S. Department of Housing and Urban Development’s Mortgagee Review Board (MRB) took the action based upon two notices of violation issued to the Company last month. The MRB cited Ideal for numerous violations of FHA origination and underwriting requirements, including failing to document borrowers’ income and creditworthiness, and for submitting false certifications to the Department.
“We have no tolerance for lenders who abuse their FHA-approval,” said FHA Commissioner David Stevens. “The evidence in this case points to a disturbing pattern of senior officials and underwriters, either not knowing what they were doing, or not caring. Therefore, Ideal has been immediately withdrawn from participating in the FHA-insured mortgage program.”
“FHA’s action triggers an immediate default in the Ginnie Mae program,” said Ginnie Mae Executive Vice President Mary Kinney. “We have taken these steps to protect the integrity of our MBS program and the American taxpayer.”
At HUD’s request, the U.S. Attorney’s Office for the Eastern District of New York is also pursuing a civil fraud injunction against Ideal and one of its senior managers. The action taken today follows a Quality Assurance review that found Ideal violated the following HUD/FHA requirements by:
- Using conflicting information in originating and obtaining HUD/FHA mortgage insurance;
- Submitting false certifications that an employee of the lender obtained directly from the borrower the information contained in the application;
- Approving loans that did not meet the minimum credit requirements;
- Failing to adequately document the stability and/or source of income used to qualify mortgage loans;
- Failing to adequately document the source of funds used to close the loan or satisfy various omitted liabilities;
- Omitting liabilities from the underwriting analysis without supporting documentation;
- Approving loans with ratios that exceeded HUD standards without significant compensating factors;
- Exceeding HUD requirements when calculating the maximum insurable mortgage;
- Failing to process a loan in accordance with HUD policy on employee loans;
- Closing a loan with an excessive mortgage broker fee paid to an approved FHA Loan Correspondent;
- Failing to provide the required documentation to support IMB’s decision to approve the mortgage loan;
- Submitting false certifications to HUD in connection with the submission of its Yearly Verification Report.
Ideal has 30 days to challenge the withdrawal action and the imposition of civil money penalties before an Administrative Law Judge.
Today’s action is part of a broader enforcement effort by HUD against mortgage lenders for violating its requirements. Last August, FHA suspended and Ginnie Mae defaulted Taylor, Bean and Whitaker (TBW) for failing to submit a required annual financial report and misrepresented that there were no unresolved issues with its independent auditor even though the auditor ceased its financial examination after discovering certain irregular transactions that raised concerns of fraud. TBW also failed to disclose, and actively concealed, that it was the subject of two examinations into its business practices in the past year.
About the U.S. Department of Housing and Urban Development
HUD is the nation’s housing agency committed to sustaining homeownership; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development ad enforces the nation’s fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov.
