[Federal Register Volume 61, Number 86 (Thursday, May 2, 1996)]
[Notices]
[Pages 19631-19633]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-10845]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4051-N-01]
Office of the Assistant Secretary for Housing--Federal Housing
Commissioner; Mortgagee Review Board Administrative Actions
AGENCY: Office of the Assistant Secretary for Housing--Federal Housing
Commissioner, HUD.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: In compliance with Section 202(c) of the National Housing Act,
notice is hereby given of the cause and description of administrative
actions taken by HUD's Mortgagee Review Board against HUD-approved
mortgagees.
FOR FURTHER INFORMATION CONTACT: William Heyman, Director, Office of
Lender Activities and Program Compliance, 451 Seventh Street, S.W.,
Washington, D.C. 20410, telephone (202) 708-1515 (this is not a toll-
free number). Hearing- or speech-impaired individuals may access this
number by calling the Federal Information Relay Service TTY at 1-800-
877-8339.
SUPPLEMENTARY INFORMATION: Section 202(c)(5) of the National Housing
Act (added by Section 142 of the Department of Housing and Urban
Development Reform Act of 1989 (Pub.L. 101-235), approved December 15,
1989, requires that HUD ``publish in the Federal Register a description
of and the cause for administrative action against a HUD-approved
mortgagee'' by the Department's Mortgagee Review Board. In compliance
with the requirements of Section 202(c)(5), notice is hereby given of
administrative actions that have been taken by the Mortgagee Review
Board from October 1, 1995 through March 31, l996.
1. Associate Trust Financial Services; Camp Springs, Maryland
Action: Proposed withdrawal of HUD-FHA mortgagee approval.
Cause: Alleged submission of false information to the Department in
connection with three HUD-FHA insured mortgage loan transactions.
2. Directors Mortgage Loan Corporation/Norwest Mortgage, Inc.; Des
Moines, Iowa
Action: Settlement agreement that includes indemnification to the
Department for any claim losses in connection with 56 improperly
originated FHA insured mortgages; payment of a civil money penalty in
the amount of $56,000; and an independent CPA review in the future to
determine compliance with the HUD-FHA Section 203(k) program
requirements.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
Section 203(k) program requirements by Directors Mortgage Loan
Corporation, which was subsequently purchased by Norwest Mortgage, Inc.
The violations included: calculating maximum mortgage amounts using a
purchase contract that did not reflect the true purchase price;
violating the seven unit limitation; improperly adding mortgage
payments in the property rehabilitation cost; failure to perform field
reviews of appraisals involving investor loans; permitting the seller
to loan the required investment for the benefit of the mortgagor;
miscalculating maximum mortgage amounts by failing to deduct seller
concessions from the purchase price; and permitting loans to close that
contained alleged false statements.
3. The Money Store; Sacramento, California
Action: Settlement agreement that includes: cancellation of HUD-FHA
insurance in connection with six improperly originated Title I loans;
payment to the Department in the amount of $35,000; and a future review
by a CPA or other independent party to determine compliance with HUD-
FHA Title I program requirements.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
Title I property improvement loan program requirements that included:
failure to properly service Title I loans; failure to timely submit
insurance claims; and failure to timely report the sale of Title I
notes and transfers of insurance reserves.
4. Empire Funding Corporation; Austin, Texas
Action: Settlement agreement that includes: cancellation of HUD-FHA
insurance in connection with seven improperly originated Title I loans;
indemnification for the Department's claim loss on one improperly
originated Title I loan; payment of a civil money penalty in the amount
of $13,000; and corrective action to assure compliance with HUD-FHA
requirements.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
Title I property improvement loan program requirements that included:
accepting falsified completion certificates; alleged falsified lender
inspection reports; failure to resolve borrower complaints; permitting
dealers to participate without regard to performance; and failure to
report dealer irregularities.
5. TMI Financial, Inc.; Austin, Texas
Action: Settlement agreement that includes a voluntary exclusion
from participation in the HUD-FHA Title I property improvement loan
program for a period of one year and a civil money penalty of $132,000.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
Title I property improvement loan program requirements that included:
submitting alleged false insurance claims; accepting falsified
completion certificates; alleged falsified lender inspection reports;
failure to resolve borrower complaints; and failure to report dealer
irregularities.
6. New England Mortgage Brokers, Inc.; North Andover, Massachusetts
Action: Settlement agreement that includes: payment to the
Department of a civil money penalty in the amount of $3,000; corrective
action to assure compliance with HUD-FHA
[[Page 19632]]
requirements; and a future review by an independent CPA to determine
compliance with HUD-FHA requirements.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
requirements that included: failure to implement an adequate Quality
Control Plan; failure to perform quality control reviews of loan
correspondents; permitting non-exclusive employees to originate HUD-FHA
insured mortgages; failure to conduct face-to-face interviews with
mortgagors; and paying a referral fee to an independent contractor.
7. State Funding, Inc.; Orange, California
Action: Probation and a civil money penalty in the amount of
$10,000.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
requirements that included: failure to implement and maintain a Quality
Control Plan for the origination of HUD-FHA insured mortgages; failure
to remit Up-Front Mortgage Insurance Premiums within 15 days from the
date of loan closing and to remit late charges and interest penalties;
establishing subordinate notes in originating HUD-FHA streamline
refinances; and failure to timely submit loans for endorsement.
8. Calcorp Finance, Inc.; Bell, California
Action: Settlement agreement that includes: indemnification to the
Department in connection with three improperly originated mortgages;
and corrective action to assure compliance with HUD-FHA requirements.
Cause: A HUD monitoring review that cited violations of HUD-FHA
requirements that included: failure to conduct face-to-face interviews
with borrowers; submitting alleged false information to HUD-FHA; and
failure to close loans in the company's name.
9. Pacific Inland Mortgage Corporation; Anaheim Hills, California
Action: Settlement agreement that includes: indemnification to the
Department for any claim losses in connection with two improperly
originated loans; payment of a civil money penalty in the amount of
$1,000; and corrective action to assure compliance with HUD-FHA
requirements.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
requirements including: failure to implement a Quality Control Plan for
the origination of HUD-FHA insured mortgages; submission of alleged
false information to HUD-FHA; and permitting borrowers to sign loan
documents in blank.
l0. Western Fidelity Mortgage Company; Salt Lake City, Utah
Action: Settlement agreement that includes: payment of a civil
money penalty in the amount of $2,000; and corrective action to assure
compliance with HUD-FHA requirements.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
requirements including: failure to comply with reporting requirements
under the Home Mortgage Disclosure Act (HMDA); and failure to implement
an adequate Quality Control Plan for the origination of HUD-FHA insured
mortgages.
11. First American Mortgage Company; Sulphur Springs, Texas
Action: Settlement agreement that includes: indemnification to the
Department for claim losses in connection with two improperly
originated loans; and corrective action to assure compliance with HUD-
FHA requirements.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
requirements including: failure to perform face-to-face interviews with
borrowers; permitting borrowers to handcarry verifications of
employment; and failure to implement a Quality Control Plan.
12. Seacoast Equities, Inc.; La Mesa, California
Action: Probation and payment of a civil money penalty in the
amount of $25,000.
Cause: Failure to comply with the terms of a Settlement Agreement
with the Mortgagee Review Board with respect to the use of false and
misleading advertising in connection with the HUD-FHA Title I property
improvement loan program.
13. American Mortgage Professionals; Escondido, California
Action: Settlement agreement that includes: payment of a civil
money penalty in the amount of $2,000; and corrective action to assure
compliance with HUD-FHA requirements.
Cause: Use of false and misleading advertising in connection with
the HUD-FHA Title I program.
14. Classic Financial Corporation; Tustin, California
Action: Settlement agreement that includes: payment of a civil
money penalty in the amount of $2,000; and corrective action to assure
compliance with HUD-FHA requirements.
Cause: Use of false and misleading advertising in connection with
the HUD-FHA Title I program.
15. Interbank Funding Group; San Diego, California
Action: Settlement agreement that includes: payment of a civil
money penalty in the amount of $2,000; and corrective action to assure
compliance with HUD-FHA requirements.
Cause: Use of false and misleading advertising in connection with
the HUD-FHA Title I program.
16. Mortgage America Nationwide; Grand Terrace, California
Action: Settlement agreement that includes: payment of a civil
money penalty in the amount of $2,000; and corrective action to assure
compliance with HUD-FHA requirements.
Cause: Use of false and misleading information in connection with
the HUD-FHA Title I program.
17. Unifed Mortgage Corporation; San Diego, California
Action: Settlement agreement that includes: payment of a civil
money penalty in the amount of $2,000; and corrective action to assure
compliance with HUD-FHA requirements.
Cause: Use of false and misleading advertising in connection with
the HUD-FHA Title I program.
18. Z and Z Funding Group; San Diego, California
Action: Settlement Agreement that includes: payment of a civil
money penalty in the amount of $2,000; and corrective action to assure
compliance with HUD-FHA requirements.
19. K Mortgage Corporation; Wall Township, New Jersey
Action: Settlement Agreement that includes: indemnification and/or
buydown of mortgage amounts of three overinsured mortgages;
indemnification for any claim loss for one improperly originated
mortgage; refunds to borrowers of excessive discount points; and
payment of a civil money penalty of $500.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
requirements including: originating HUD-FHA insured mortgages prior to
obtaining the required branch office approvals; failure to implement
and maintain an adequate Quality Control Plan; using an identity of
interest closing agent; closing loans that exceed HUD-FHA maximum
mortgage amounts; unallowable credits to the borrowers for repairs;
charging the borrowers excessive discount points;
[[Page 19633]]
failure to determine the source of funds required for closing; and
failure to give full credit for an earnest money deposit.
20. Davis-Penn Mortgage Company; Houston, Texas
Action: Settlement Agreement that includes: payment to the
Department of a civil money penalty in the amount of $8,000; and
submission of acceptable rental use agreement with respect to two
multifamily projects.
Cause: Violation of HUD-FHA multifamily mortgage insurance program
requirements resulting from improperly accepting payment in full of two
multifamily project mortgages without obtaining the prior approval of
HUD-FHA.
21. MP Inc. d/b/a Mortgage Professionals; Irvine, California
Action: Settlement Agreement that would include: payment of a civil
money penalty in the amount of $2,000; and corrective action to assure
compliance with HUD-FHA requirements.
Cause: Use of false and misleading advertising in connection with
the HUD-FHA Title I program.
22. Mortgage America Nationwide; Grand Terrace, California
Action: Settlement Agreement that includes: indemnification to the
Department for any claim losses in connection with two improperly
originated loans; payment of a civil money penalty in the amount of
$500; and corrective action to assure compliance with HUD-FHA
requirements.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
requirements including: failure to implement and maintain an adequate
Quality Control Plan; approval of an ineligible borrower for an insured
loan; failure to properly verify the source and/or adequacy of the
funds to close; originating a loan that exceeded HUD-FHA maximum
mortgage amount; and failure to accurately reflect all charges to the
buyers and sellers on the HUD-1 Settlement Statement.
23. Statewide Mortgage Company; Houston, Texas
Action: Proposed Settlement Agreement that would include:
indemnification to the Department for any claim losses in connection
with 35 improperly originated Title I property improvement loans;
corrective action to assure compliance with HUD-FHA requirements; and a
future review by an independent CPA to determine compliance by the
company's Bellevue, Washington branch office with HUD-FHA Title I
program requirements.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
Title I program requirements including: failure to conduct a face-to-
face or telephone interview with the borrowers; approving loan
applicants based on alleged false leases; failure to present the Title
I loan proceeds directly to the borrowers; alleged falsified property
inspection reports; failure to establish required equity; and reporting
loans for insurance that contained inaccurate information.
24. Alliance Mortgage Corporation; Villa Park, Illinois
Action: Proposed Settlement Agreement that would include:
indemnification to the Department for any claim losses in connection
with six improperly originated loans; and corrective action to assure
compliance with HUD-FHA requirements.
Cause: A HUD Office of Inspector General audit report that
disclosed violations of HUD-FHA requirements including: failure to
conduct face-to-face interviews with mortgagors; failure to properly
verify borrowers' gift funds; failure to properly verify borrower's
income; understating a borrower's liabilities; and failure to maintain
an adequate Quality Control Plan.
25. American City Mortgage Corporation; Carson, California
Action: Settlement Agreement that includes: indemnification to the
Department for any claim losses in connection with 10 improperly
originated loans; payment of a civil money penalty in the amount of
$7,000; and corrective action to assure compliance with HUD-FHA
requirements.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
requirements including: submitting loans involving ``strawbuyers'' to
HUD-FHA for mortgage insurance; using alleged false information in
originating HUD-FHA insured mortgages; failure to conduct face-to-face
interviews with mortgagors; failure to document borrower's source of
funds used for downpayment and closing costs; deleting a mortgagor from
the title in a Rate Reduction Refinance transaction; submitting a
defaulted loan to HUD-FHA for mortgage insurance endorsement;
submitting loans to HUD-FHA for insurance endorsement that were
overinsured; failure to properly implement a Quality Control Plan;
failure to properly underwrite loans submitted by Loan Correspondents;
and closing loans submitted by Loan Correspondents in the company's own
name.
26. Home Federal Savings Bank; Cleveland, Ohio
Action: Proposed Settlement Agreement that would include
indemnification to the Department for any claim losses in connection
with 21 improperly originated loans.
Cause: Violation of HUD-FHA requirements by a former employee that
included failure to perform face-to-face interviews with borrowers; and
submission of false information to the Department.
27. Western States Mortgage Corporation; Bellevue, Washington
Action: Settlement Agreement that includes: payment of a civil
money penalty in the amount of $500; and corrective action to assure
compliance with HUD-FHA requirements.
Cause: A HUD monitoring review that disclosed violations of HUD-FHA
requirements including: failure to implement and maintain an adequate
Quality Control Plan; failure to comply with HUD-FHA reporting
requirements under the Home Mortgage Disclosure Act (HMDA); sharing
office space and commingling employees with another firm; failure to
comply with disclosure requirements under the Real Estate Settlement
Procedures Act (RESPA); annual audit report not in compliance;
originating a loan that exceeded the HUD-FHA maximum mortgage amount;
failure to maintain complete mortgage origination files; and failure to
utilize proper gift letters.
Dated: April 26, 1996.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 96-10845 Filed 5-1-96; 8:45 am]
BILLING CODE 4210-27-P
