HUD’s Mortgagee Review Board has suspended three mortgage lenders accused of serious violations under the agency’s regulations.
Golden First Mortgage of Great Neck, NY, Great Country Mortgage Bankers, Inc., of Coral Gables, FL, and Beneficial Mortgage Corporation of San Juan, PR have all been barred from originating new FHA-insured mortgages.
The Board found that Golden First Mortgage failed to notify HUD/FHA about an investigation by the Office of Thrift Supervision into the business activities of the company’s president, including his involvement in a civil money penalty.
Great Country Mortgage Bankers, Inc. was suspended for violating multiple HUD/FHA requirements, including failure to implement a quality control plan, failure to disclose business affiliations, and failure to properly verify “key credit information” on 55 FHA mortgage loans reviewed by HUD.
Beneficial Mortgage Corporation was suspended for failing to notify HUD/FHA about an investigation and sanctions imposed by the Puerto Rico Financial Institutions Commissioner’s Office related to its loan servicing practices.
HUD took these actions after it determined that the serious nature of each violation posed a risk to the agency and the public, as well the FHA’s depleted insurance fund.
FHA lending increased an unhealthy 169 percent in the first half of fiscal year 2009, prompting HUD officials to improve oversight and go after bad players.
The suspension of these three companies is probably just the beginning of what will be an ongoing trend in cleaning up the FHA lending space, which many liken to the new subprime.