HUD No. 05-093|
July 6, 2005
HUD ANNOUNCES $3.2 MILLION SETTLEMENT AGAINST KB HOME MORTGAGE COMPANY
Largest settlement in history of Mortgagee Review Board
WASHINGTON -- The Department of Housing and Urban Development today announced it has reached a $3.2 million settlement with KB Home Mortgage Company in connection with a series of alleged violations of HUD requirements. The $3.2 million is the largest amount ever collected in the 30-year history of HUD's Mortgagee Review Board (MRB), which takes administrative actions against FHA-approved lenders.
"I am proud to announce this landmark settlement," said Brian D. Montgomery, Assistant Secretary for Housing-Federal Housing Commissioner, who chairs the Mortgagee Review Board. "This settlement sends a strong message that FHA will not tolerate violations of its requirements, especially when they can cause homeowners to default on their mortgages."
The 13 alleged violations by KB Mortgage Company involve a number of poor underwriting practices such as approving loans to borrowers who were not eligible; approving loans based on overstated or incorrect income; failing to include all of borrowers' debts; failing to properly verify sources of funds; and, failing to ensure gift letters met HUD requirements.
Following a review of KB Home Mortgage's FHA activities by HUD's Quality Assurance Division, the MRB decided to take action. The other HUD officials who comprise the Mortgagee Review Board are HUD's General Counsel, the President of Ginnie Mae, HUD's Chief Financial Officer, HUD's Assistant Secretary for Administration and the Director of the Enforcement Center. In cases involving discrimination, the Department's Assistant Secretary for Fair Housing and Equal Opportunity also participates. All MRB administrative actions are published in the Federal Register.
HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; 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 as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet and espanol.hud.gov.