HUD Archives: News Releases

HUD Protects Homebuyers by Withdrawing FHA Approval from Florida and California Lenders

WASHINGTON - U.S. Department Housing and Urban Development officials took steps to protect homebuyers today by permanently withdrawing a Florida mortgage company's authority to make or acquire Federal Housing Administration insured loans and by withdrawing such authority from a California mortgage company for three years.

"We took these enforcement actions to protect the FHA insurance fund and FHA borrowers," said HUD Federal Housing Commissioner John Weicher. "Lenders who think about breaking the rules should take notice that HUD will aggressively enforce its rules and the consequences can be severe."

HUD's Mortgagee Review Board (MRB) permanently withdrew FHA approval from the Foundation Funding Group Inc., (FFGI) of Tampa, FL, for serious violations of FHA lending requirements that included improper cash-outs when originating streamlined, refinanced mortgages, and the improper refinancing of fixed rate and adjustable rate mortgages. FFGI also failed to implement a HUD-mandated quality control plan that requires lenders to make adequate and timely reviews to detect possible violations, including fraud.

The MRB, comprised of Weicher and six senior HUD officials, also withdrew FHA approval from Omega Financial Services, Inc., of Whittier, CA, for three years for using falsified documentation in originating FHA loans, and for failing to implement a quality control plan in compliance with HUD requirements.

The MRB also proposed a three-year withdrawal of FHA approval from three lenders in New Jersey, Tennessee and Utah for violating a number of FHA requirements, including improperly qualifying loan applicants, failing to implement a quality control plan, failing to remit up-front Mortgage Insurance Premiums and failing to submit loans for endorsement to FHA in a timely manner.

The proposed withdrawals become effective in 30 days without any further action by HUD. During the 30-day period, however, lenders may appeal the proposed withdrawal.