The U.S. Department of Housing and Urban Development is touting hundreds of thousands of dollars in settlements it has extracted from originators of government-insured loans over mortgage fraud and other operational issues.
The agency posted the settlements in a Federal Register notice today.
Last September, A&E Mortgage Company LLC settled with HUD for a $300,000 administrative payment, according to the register. The action against the New Jersey company was the result of alleged mortgage fraud on eight Federal Housing Administration-insured loans as well as employing and using unqualified originators.
In February, Atlantic Coast Mortgage Services in New Jersey settled for $9,000 charges it failed to implement and maintain a required quality control plan and failed to ensure an employee worked for no other mortgage companies, the notice indicated.
HUD said it punished BSM Financial LP, which does business as Banksource Mortgage in Texas, in October because it failed to remit mortgage insurance premiums within the required time. Other alleged violations included poor quality control maintenance, improper income and payment calculations and incorrectly verified fund sources. Among a host of other violations listed was allowing an underwriter to perform work for a manufactured housing seller.
Florida-based Citrus State Mortgage Inc. agreed in September to pay $35,000 for paying an underwriter and a company owned by an underwriter prohibited commissions, the notice said. Quality control problems were also at issue for Citrus, which agreed not to apply for reinstatement as an approved mortgagee until March 2008.
Another Florida company, Faith Financial Group Inc., paid HUD $8,000 for quality control deficiencies and failing to ensure employees were exclusively employed by the company.
In October 2005, Colban Funding Inc. lost its FHA approval for three years and agreed to pay a penalty of $76,000 for a number of violations including allowing non-approved FHA brokers to originate FHA loans, HUD noted. Other violations by the New York company included failing to follow up for original documents and doing a poor job underwriting loans.
Colony Mortgage Corp. in Ohio reportedly settled last August for $38,000 and agreed to indemnify HUD on two loans. In addition to numerous underwriting deficiencies, Colony was cited for sponsoring loans from an unapproved entity.
California-based Homewide Lending Corp. settled in October for $48,000 charges that it committed mortgage fraud amid inadequate quality control, the statement said. Also cited was the company’s allowing real estate agents to hand carry verifications of employment.
Moreland Financial Corp., in Pennsylvania, lost its FHA approval in January because it failed to pay a previously-imposed penalty of $22,000, HUD said.
Over in Michigan, Shore Financial Services Inc. settled with the government agency allegations of quality control deficiencies, inadequate income and down-payment verification and unacceptable appraisals, the notice indicated.
Towne Mortgage and Realty, also in Michigan, agreed in February to pay HUD $26,601 for failing to ensure borrowers met the minimum credit requirements and not adequately verifying income.
Maryland-based USA Home Loans Inc. “used misleading advertising regarding the FHA Single Family Mortgage Insurance Premium refund program,” according to HUD. The violation cost the company $2,000.
Though they settled, HUDÂ noted the firms listed in the mortgagee notice did not necessarily admit to the violations.
