Lend America, which calls itself “the authority on FHA financing,” has been accused of multiple origination and underwriting violations by the HUD Mortgagee Review Board.
The Board alleged that the mortgage lender used conflicting information in originating and obtaining HUD/FHA mortgage insurance, submitted false certifications from borrowers, approved loans that didn’t meet credit requirements, failed to document income and asset information, omitted liabilities from underwriting analyses, and charged excessive mortgage broker fees.
Basically all the abuses that led up to the mortgage crisis, but are now actually being acted upon.
As a result, four mortgage underwriters with the company have been suspended and/or debarred for their connection to these violations and may face civil money penalties.
Additionally, the U.S. Attorney for the Eastern District of New York is seeking a temporary restraining order against the company’s parent “Ideal Mortgage Bankers,” which would prevent them from originating any new FHA mortgages while federal prosecutors pursue a civil fraud injunction against the company
“Any FHA-approved lender that seeks to do business with us must follow our standards, it’s just that simple,” said FHA Commissioner David Stevens, in a statement on its website.
“If we determine that our partners are not playing by the rules, they’ll cease being our partners. It’s not just about protecting the financial health of the FHA insurance fund – this is about protecting each and every family that looks to the FHA for safe and secure mortgage financing.”
Lend America and its parent company, along with the four underwriters in question, have 30 days to respond to the allegations.
If the Melville, NY-based company fails to overturn the charges, it could be a big blow to mortgage brokers, as it planned to re-launch a nationwide wholesale lending program this month.