Some 240 lenders across the country got in trouble with the ""Federal Housing Administration"":http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/fhahistory (FHA) this year, with the federal agency announcing sanctions on Friday that included revocations of approval, suspensions, reprimands, and civil monetary fines.[IMAGE]
The FHA's Mortgagee Review Board (MRB) slapped lenders with administrative penalties for scrimping on loan criteria required by the federal agency, which it said in some cases resulted in over-insured loans, excessive and duplicative fees for borrowers, and failing to separate business operations.
""It's never been more important that lenders doing business with FHA apply our standards to each and every loan they originate and underwrite,"" Carol Galante, acting FHA commissioner, said in a ""statement"":http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2011/HUDNo.11-161.
""FHA requirements ensure homeowners are put on a path of sustainable homeownership and that ultimately helps stabilize entire neighborhoods and communities,"" she added.[COLUMN_BREAK]
Among the institutions whose approval the FHA will withdraw: Ft. Lauderdale-based First Continental Mortgage, Inc.; Cranston-based Action Mortgage Corp.; Great Neck-based Cambridge Home Capital; Gold Neck-based Golden First Mortgage; and Melville-based Somerset Investors Corp.
Reasons for withdrawal included, among other things, the failure by lenders to abide by ""HUD"":http://portal.hud.gov/portal/page/portal/HUD program rules, implement quality control guidelines, properly document borrower income and eligibility information, and make loans under established rules and procedures, according to a MRB notice in the ""Federal Register"":http://www.gpo.gov/fdsys/pkg/FR-2011-07-29/pdf/2011-19293.pdf.
For other offenses, FHA ordered lenders to pay civil penalty fines. For falsifying loan certification information and failing to separate companies, Greenwood-based Catalyst Lending, Inc., will now need to pay $50,000 in fines without admitting fault in court. In another instance, the federal agency ordered Southlake-based Alacrity Lending Company to pay $237,500 in civil money fines for failing to implement quality control procedures, omitting serious violations in reviews, and allowing discrepancies between disbursements and sales prices.
These administrative sanctions and penalties join some 1,600 others taken against lenders by the FHA last year, and over 2,300 since 2009. According to the statement, these penalties come on the heels of new rules implemented by the FHA in order to bolster risk management policies and underscore the role of the lender in broker oversight.
The MRB is responsible for issuing sanctions against FHA-approved lenders for statutory violations, with the most severe penalties including the revocation of approval.