HUD TAKES ACTION AGAINST 55 LENDERS

WASHINGTON - U.S. Housing and Urban Development Assistant Secretary for Housing/Federal Housing Commissioner John C. Weicher today announced that HUD's Mortgagee Review Board has taken administration action against 55 lenders in 22 states for violating federal lending regulations. The actions include withdrawing Federal Housing Administration (FHA) lending authority, and imposing sanctions ranging from indemnifications of loans to payments of almost $3 million in fines.

"These administrative actions show that HUD is serious about protecting the American homebuyer," Weicher said. "Lenders who think about breaking the rules should take notice and understand that the consequences can be severe."

HUD's actions, published in the July 23 Federal Register, resulted from standard compliance reviews of FHA-approved lenders. HUD's four Home Ownership Centers - in Atlanta, Denver, Philadelphia and Santa Ana, CA - conducted a majority of the reviews. HOCs refer the most serious violations of FHA requirements to HUD's Mortgagee Review Board, established to protect the FHA insurance fund. The MRB is comprised of the Federal Housing Commissioner and six senior HUD officials.

The MRB imposed its severest penalty against Mortgage Lending of America, Inc., Huntington Station, NY, with $533,500 in civil penalties and a five-year withdrawal of authority to originate FHA-insured loans. Monetary fines and withdrawals of FHA authority were also imposed against:

• Capitol Mortgage Bankers, Inc., Millersville, MD ($280,500/5 years)
• American Skycorp, Inc., Timonium, MD ($220,000/5 years)
• Assurety Mortgage Group, Inc., Decatur, GA ($195,500/8 years)
• Avstar Mortgage Corp., Blue Bell, PA ($192,000/8 years)
• National Charter Mortgage Corp., Gardena, CA ($100,000/3 years)
• Milestone Mortgage Corp., LaPalma, CA ($88,000/5 years)
• Heartland Mortgage Inc., Tucson, AZ ($33,000/3 years)
• Morgan Home Funding Corp., Rockville, MD ($25,000/3 years)
• Specialty Mortgage Corp., Hialeah, FL ($8,000/3 years)
• Whitehall Funding, Inc., Indianapolis, IN ($5,500/5 years)

Also, the MRB immediately suspended all government business from Island Mortgage Network, Inc., Melville, NY and Sunstate Mortgage (d/b/a Sun America Mortgage), Daytona Beach, FL, for not having valid state licenses.

The MRB reached settlement agreements with 38 of the 55 lenders, which included imposing $1.3 million in civil penalties or other assessments and the indemnification of 161 loans, equivalent to about $4.8 million in potential savings to the FHA insurance fund.

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