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Notice

Mortgagee Review Board; Administrative Actions

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Information about this document as published in the Federal Register.

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AGENCY:

Office of the Assistant Secretary for Housing-Federal Housing Commissioner, HUD.

ACTION:

Notice.

SUMMARY:

In compliance with section 202(c) of the National Housing Act, notice is hereby given of the cause and description of administrative actions taken by HUD's Mortgagee Review Board against HUD-approved mortgagees.

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FOR FURTHER INFORMATION CONTACT:

D. Jackson Kinkaid, Secretary to the Mortgagee Review Board, 451 7th Street, SW., Washington, DC 20410, P-200, telephone: (202) 708-3041 extension 3574 (this is not a toll-free number). A Telecommunications Device for Hearing and Speech-Impaired Individuals (TTY) is available at 1 (800) 877-8339 (Federal Information Relay Service).

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SUPPLEMENTARY INFORMATION:

Section 202(c)(5) of the National Housing Act (added by section 142 of the Department of Housing and Urban Development Reform Act of 1989, Public Law 101-235, approved December 15, 1989), requires that HUD “publish a description of and the cause for administrative action against a HUD-approved mortgagee” by the Department's Mortgagee Review Board. In compliance with the requirements of Section 202(c)(5), notice is hereby given of administrative actions that have been taken by the Mortgagee Review Board from April 14, 2001 through September 30, 2001.

1. 1st American Home Loan, Merrilville, IN

Action: Settlement Agreement signed May 21, 2001. Without admitting fault or liability, 1st American Home Loan (“FAHL”) agreed to a civil money penalty of $7,000. FAHL also agreed to indemnify HUD for any losses incurred on one loan.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: FAHL failed to ensure that loan officers Start Printed Page 63718worked exclusively for FAHL; FAHL paid referral fees to other lenders; FAHL failed to establish, maintain and implement a Quality Control Plan; and FAHL failed to maintain complete loan origination files for review.

2. Altiva Financial Corporation, Formerly Known as MEGO Mortgage Corporation, Atlanta, GA

Action: In a letter dated May 18, 2001, the Board withdrew Altiva Financial Corporation's (“Altiva”) HUD/FHA approval for three years. The Board also voted to impose a civil money penalty of $104,500.

Cause: HUD's Office of Inspector General made the following findings of violations of HUD/FHA requirements: Altiva failed to ensure that the loan amount did not exceed the cost of repairs described in the borrowers' Title I loan application in seventeen loans; Altiva failed to properly evaluate the borrowers' income and/or liabilities; Altiva failed to document the borrowers' source of funds for the initial payment; and Altiva failed to ensure that loan proceeds were only used for the eligible purposes cited in the loan application.

3. America's Mortgage, Inc., Roswell, GA

Action: Settlement Agreement signed May 3, 2001. Without admitting fault or liability, America's Mortgage, Inc. (“AMI”) agreed to a civil money penalty of $3,000.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: AMI failed to file annual loan origination reports for 1996-1998, which supplements the requirements of the Home Mortgage Disclosure Act; AMI failed to establish, maintain and implement a Quality Control Plan in compliance with HUD/FHA requirements; and AMI failed to report to HUD a violation of law or regulation, false statement, or program abuse.

4. BancGroup Mortgage Corporation, Palos Hills, IL

Action: Settlement Agreement signed August 28, 2001. Without admitting fault or liability, BancGroup Mortgage Corporation (“BMC”) agreed to a civil money penalty of $12,000. In addition, BMC agreed to refund all impermissible fees charged to borrowers on FHA/HUD loans it closed between September 1, 1998 and August 31, 1999.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: BMC failed to file annual loan origination reports for 1998, which supplements the requirements of the Home Mortgage Disclosure Act; BMC failed to establish, maintain and implement a Quality Control Plan in compliance with HUD/FHA requirements; BMC failed to retain documents originating mortgagees are required to maintain; BMC charged unallowable fees and allowed unexplained and/or pre-paid credits; and BMC failed to itemize on the HUD-1 Settlement Statement the items paid on behalf of the borrowers.

5. California Empire Financial Group, Inc., Rancho Cucamonga, CA

Action: Settlement Agreement signed June 1, 2001. Without admitting fault or liability, California Empire Financial Group, Inc. (“CEFG”) agreed to a civil money penalty of $11,000. [For the prior Federal Register notice on the proposed settlement agreement, see 65 FR at 53731, September 5, 2000.]

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: CEFG allowed non-employees to originate HUD/FHA loans; and CEFG allowed employees to act as real estate agents and loan officers.

6. Casey Duncan Group, Inc., Timonium, MD

Action: In a letter dated May 8, 2001, the Board withdrew Casey Duncan Group, Inc.'s (“CDGI”) HUD/FHA approval for five years.

Cause: In conjunction with a related MRB action, American SkyCorp, Inc., HUD's Departmental Enforcement Center observed the following violations of HUD/FHA requirements: CDGI failed to exclude participants that were suspended from participating in federal government programs; CDGI failed to meet basic lender approval requirements by its surrender of its license to originate mortgages in the State of Maryland; and CDGI failed to maintain the requirements for a main office.

7. Cendant Mortgage Corporation, Mt. Laurel, NJ

Action: Settlement Agreement signed September 25, 2001. Without admitting fault or liability, Cendant Mortgage Corporation (“CMC”) agreed to a payment of $10,000. In addition, Cendant agreed to indemnify HUD for any losses incurred on 36 loans.

Cause: HUD's Quality Assurance Division made the following finding of violations of HUD/FHA requirements: CMC allowed a non FHA approved lender, Select Financial Services, to originate 63 HUD/FHA insured loans.

8. Colonial Atlantic Mortgage, Silver Spring, MD

Action: Settlement Agreement signed July 25, 2001. Without admitting fault or liability, Colonial Atlantic Mortgage (“CAM”) agreed to a civil money penalty of $4,000.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: CAM failed to file annual loan origination reports for 1997-1998, which supplements the requirements of the Home Mortgage Disclosure Act; CAM accepted faxed copies of required documents in 2 loans; and CAM failed to have, implement and maintain an adequate Quality Control Plan that meets HUD guidelines.

9. Columbia National, Inc., Columbia, MD

Action: Settlement Agreement signed May 21, 2001. Without admitting fault or liability, Columbia National, Inc. (“CN”) agreed to an administrative payment of $24,000. CN also agreed to indemnify HUD for any losses incurred on 24 loans.

Cause: CN self reported two loans to HUD after discovering fraud during the course of its own quality assurance audit of a branch office it later shut down. Thereafter, HUD's Quality Assurance Division initiated a review and made the following findings of violations of HUD/FHA requirements: CN used falsified documentation or conflicting information to originate loans and obtain HUD/FHA mortgage insurance; CN failed to document the borrower's source of funds used for down payment or closing costs; CN approved mortgage loans where loan origination documents passed through the hands of an interested third party; CN approved mortgage loans where the ratios exceeded HUD/FHA guidelines; CN approved mortgage loans where the borrower's stability of income was not adequately documented; CN failed to properly verify the borrower's previous rental history; CN approved mortgage loans where borrowers were charged fees which were not specifically permitted by HUD/FHA; CN failed to obtain insured ten year warranty plans from a HUD/FHA approved entity for high loan to value, new construction Start Printed Page 63719loans; CN failed to obtain letters of credit reference where the borrower had not established traditional credit; CN failed to properly document the borrower's income; CN failed to ensure that the property's valuation conditions were met in accordance with HUD/FHA requirements; CN approved a mortgage loan with a reduced up-front mortgage insurance premium where the borrower did not meet the criteria for the reduced MIP as outlined by HUD/FHA requirements; and CN failed to ensure that the borrower met the minimum required cash investment.

10. Corona Hills Financial, Inc., d/b/a American Capitol Mortgage, Boise, ID

Action: Settlement Agreement signed June 1, 2001. Without admitting fault or liability, Corona Hills Financial, Inc. d/b/a/American Capitol Mortgage (“ACM”) agreed to pay a civil money penalty of $5,500. ACM also agreed to surrender to HUD any assets that it accrued for the next 5 years up to $60,000.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: ACM failed to file an annual loan origination report for 1998 which supplements the requirements of the Home Mortgage Disclosure Act; ACM used independent contractors to originate HUD/FHA insured loans; ACM used false documentation to originate HUD/FHA insured loans; ACM failed to provide complete loan origination files for review; ACM used income/employment documents that do not support the borrower's income; ACM failed to include all known liabilities in calculating the ratios; ACM failed to properly document the source of funds for a gift; and ACM used an expired conditional commitment.

11. Cypress Financial Mortgage Corporation, Inc., Davie, FL

Action: In a letter dated May 18, 2001, the Board withdrew Cypress Financial Mortgage Corporation, Inc.'s (“Cypress”) HUD/FHA approval for three years. The Board also voted to impose a civil money penalty of $22,000.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: Cypress failed to maintain and implement a Quality Control Plan; and Cypress used false information to originate loans to obtain HUD/FHA insurance and misrepresented the Title I program to borrowers.

12. DLM Financial Services Corporation, d/b/a First Financial Mortgage, a/k/a The Home Store, Fresno, CA

Action: In a letter dated August 16, 2001, the Board withdrew DLM Financial Services Corporation's (“DLM”) [d/b/a First Financial Mortgage, a/k/a The Home Store] HUD/FHA approval for three years. The Board also voted to impose a civil money penalty of $65,000.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: DLM failed to maintain and implement a Quality control Plan in compliance with HUD requirements; DLM knowingly did business with a debarred, suspended, ineligible or voluntarily excluded individual; DLM used false information in originating an FHA insured loan; DLM allowed non-employees to originate HUD/FHA mortgage loans; DLM allowed employees to have dual employment; and DLM failed to retain complete origination files.

13. Eagle Home Loans and Realty, Inc., Sacramento, CA

Action: Settlement Agreement signed May 21, 2001. Without admitting fault or liability, Eagle Home Loans and Realty, Inc. (“EHLR”) agreed to a civil money penalty of $1000. [For the prior Federal Register notice on the proposed settlement agreement, see 65 FR at 53732, September 5, 2000.]

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: EHLR failed to file annual loan origination reports for 1995 through 1999 which supplements the requirements of the Home Mortgage Disclosure Act; EHLR failed to maintain and implement a Quality Control Plan; EHLR shared office space with its parent company; and EHLR did not clearly identify the office space to the public.

14. First Funding Mortgage Bankers Corporation, Rosedale, NY

Action: Settlement Agreement signed June 1, 2001. Without admitting fault or liability, First Funding Mortgage Bankers Corporation (“FFMBC”) agreed to a civil money penalty of $60,000. FFMBC also agreed to indemnify HUD for any losses incurred on 11 loans.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: FFMBC failed to maintain a Quality Control Plan in compliance with HUD requirements; FFMBC failed to submit One Time Mortgage Insurance Premiums Payments within 15 days of loan closing; FFMBC failed to determine that borrowers met minimum cash investment requirements; FFMBC failed to verify the source and adequacy of funds for the down payment and/or closing costs; FFMBC failed to verify income used to qualify the borrower; and FFMBC failed to resolve conflicts in information contained within the loan file prior to loan closing.

15. First Union Mortgage Corporation, Raleigh, NC

Action: Settlement Agreement signed September 18, 2001. Without admitting fault or liability, First Union Mortgage Corporation (“FUMC”) agreed to indemnify HUD for any losses incurred on 4 loans.

Cause: HUD's Departmental Enforcement Center made the following findings of violations of HUD/FHA requirements resulting from a Quality Assurance Division review of Fidelity Home Mortgage Corporation, a loan correspondent that FUMC sponsored: FUMC failed to properly verify the source and adequacy of funds for the down payment and failed to properly verify income requirements.

16. Golden Home Mortgage Corporation, Concord, CA

Action: Settlement Agreement signed August 28, 2001. Without admitting fault or liability, Golden Home Mortgage Corporation (“GHMC”) agreed to a civil money penalty of $20,000. In settlement, GHMC agreed to withdraw its appeal of the withdrawal of HUD/FHA approval for five years that the Board had imposed on GHMC in a letter dated January 29, 2001. It further agreed to forever forfeit its FHA approval.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: GHMC originated 19 HUD/FHA insured mortgages in which false statements were submitted to HUD and GHMC was aware of these false statements; GHMC failed to ensure that non-profit mortgagors did not exceed 10% profit on properties purchased from HUD with a 30 % discount; GHMC processed a loan that resulted in the Department over-insuring an FHA loan; GHMC failed to accurately prepare the closing instructions causing the sponsor to submit false and/or inaccurate HUD-1 Settlement Statements to the Department in 38 loans; GHMC used Start Printed Page 63720falsified documentation in originating an FHA loan; GHMC falsely certified that a repair condition, the repair of a swimming pool, had been satisfied in one loan; GHMC processed loans containing false and/or inaccurate owner occupancy information in two loans; GHMC failed to properly document the transfer of gift funds in two loans; GHMC provided false statements and/or certifications concerning housing counseling in 16 loans; GHMC provided false information concerning face-to-face interviews, used non-employees to perform loan origination functions, and failed to meet face-to-face with first-time homebuyers in five loans; GHMC failed to process loan applications within HUD/FHA guidelines in four loans; GHMC charged unallowable fees on FHA loans in two loans; GHMC allowed a mortgagor to sign a blank document; and GHMC failed to file annual loan origination reports for 1996-1998, which supplements the requirements of the Home Mortgage Disclosure Act.

17. Herring National Bank, Vernon, TX

Action: Settlement Agreement signed August 28, 2001. Without admitting fault or liability, Herring National Bank (“Herring”) agreed to a civil money penalty of $30,000. Herring also agreed to indemnify HUD for any losses incurred on 6 loans.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: Herring operated branch offices under prohibited branch arrangements; Herring failed to meet the requirements for late endorsements in three loans; Herring failed to adequately document the sufficiency and/or source of funds to close three transactions; Herring failed to support income used to qualify the mortgagor in one loan; and Herring failed to obtain the required field reviews on properties previously sold by HUD's Real Estate Owned Division in three loans.

18. Home Loan Mortgage Corporation, Hesperia, CA

Action: Settlement Agreement signed May 3, 2001. Without admitting fault or liability, Home Loan Mortgage Corporation (“HLMC”) agreed to a civil money penalty of $144,000. HLMC also agreed to indemnify HUD for any losses incurred on 7 loans.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: HLMC failed to maintain and implement a quality control plan in compliance with HUD requirements; HLMC failed to remit timely Up Front Mortgage Insurance Premiums; HLMC failed to segregate escrow funds; HLMC failed to submit loans for endorsement in a timely manner; HLMC submitted ineligible loans for endorsement; HLMC used other entities to originate loans through branch office arrangements; HLMC used independent contractors as loan originators; and HLMC failed to properly verify the source and adequacy of funds for the down payment and/or closing.

19. InterAmerican Mortgage Corporation, Rosedale, NY

Action: Settlement Agreement signed July 25, 2001. Without admitting fault or liability, InterAmerican Mortgage Corporation (“IAMC”) agreed to pay HUD $524,256.79, representing losses HUD incurred on 5 loans that were part of a prior August 27, 1997 Settlement Agreement with HUD.

Cause: The Board followed up on IAMC's failure to indemnify HUD on five loans which were the subject of an August 27, 1997 Settlement Agreement. This failure to indemnify violated HUD regulations and breached the 1997 Settlement Agreement.

20. Intercoastal Funding Corporation, Huntington Beach, CA

Action: Settlement Agreement signed May 3, 2001. Without admitting fault or liability, Intercoastal Funding Corporation agreed to a civil money payment of $11,000.

Cause: HUD's Quality Assurance Division made the following finding of violations of HUD/FHA requirements: Intercoastal Funding Corporation failed to maintain and implement a Quality Control Plan in compliance with HUD requirements.

21. J & R Mortgage, Inc., San Mateo, CA

Action: Settlement Agreement signed May 3, 2001. Without admitting fault or liability, J & R Mortgage, Inc. (“JRM”) agreed to a civil money penalty of $25,000. JRM also agreed to indemnify HUD for any losses incurred on 6 loans.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: JRM used false information to originate 9 loans; JRM allowed non-employees to take loan applications in 9 loans; JRM permitted “straw buyers” to qualify for HUD/FHA insured mortgages in 3 loans; JRM failed to verify the source of funds used for borrowers' down payment and/or closing costs and thereby, did not ensure that borrowers met their minimum required investment in 4 loans; and JRM allowed real estate agents to accept second deeds of trust and/or promissory notes from mortgagors in exchange for making the mortgagors' minimum required investment in 3 loans.

22. Johnson Mortgage Corporation, New Orleans, LA

Action: Settlement Agreement signed July 25, 2001. Without admitting fault or liability, Johnson Mortgage Corporation (“JMC”) agreed to a payment of $16,500.

Cause: HUD's Quality Assurance Division made the following finding of violations of HUD/FHA requirements: JMC failed to maintain and implement a Quality Control Plan in compliance with HUD/FHA requirements, despite previous findings on this requirement and JMC's assurance of corrective action.

23. Malone Mortgage Company America, Ltd., Carlsbad, CA

Action: Settlement Agreement signed May 21, 2001. Without admitting fault or liability, Malone Mortgage Company America, Ltd. “(MMC”) agreed to a civil money penalty of $100,000. MMC also agreed to indemnify HUD for any losses incurred on 4 loans. [For the prior Federal Register notice on the proposed settlement agreement, see 65 FR at 53735, September 5, 2000.]

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: MMC employed, as a loan officer, an individual who was concurrently working for the mortgagor entity and had an ownership interest in another lending institution; MMC's files were found to contain false completion inspections and 203(k) escrow draws; MMC charged consulting fees and inspection fees that were unearned; MMC originated single-family 203(k) mortgages for the purpose of financing the acquisition of multifamily housing complexes with the knowledge that title to the properties would be subsequently transferred to limited partnerships; MMC processed, approved and closed mortgages where the mortgagor failed to meet the minimum capital investment requirements due to the receipt of Low Income Housing Tax Credits; MMC failed to verify adequate funds from an acceptable source to be used to close the mortgages and to meet the reserve requirements after closing the FHA Start Printed Page 63721insured mortgages; MMC provided FHA insured financing to a nonprofit where there was less than an arms-length transaction between the nonprofit's officers and entities providing goods and services; MMC permitted the nonprofit mortgagor to close on FHA insured mortgages and subsequently sell the properties via Contract for Deed; MMC originated FHA insured mortgages using Uniform Residential Appraisal Reports (URAR) that were found to be deficient, which resulted in overstated values; MMC escrowed and released excess amounts for mortgage payments; MMC did not properly value commercial space that was acquired by an affiliate of the mortgagor entity; MMC failed to properly account for a credit that was to have been given to the mortgagor from the seller, thereby reducing the acquisition cost; MMC used an incorrect sales price when determining acquisition cost for the purpose of calculating maximum mortgage amounts; MMC submitted to HUD for endorsement loans that were closed incorrectly; MMC closed and submitted for endorsement mortgages on properties that exceeded the 4 unit limit in effect for single-family programs; MMC failed to obtain as-is appraisals on properties that were acquired as part of bulk purchases; MMC originated inaccurate correspondence that was used by the mortgagor when applying for Low Income Housing Tax Credits; MMC permitted the mortgagor to receive payment for sweat equity for repair items completed by the mortgagor; MMC processed, approved, and closed loans where the properties were not eligible for 203(k) mortgage insurance; MMC failed to ensure that rehabilitation work was completed in a timely manner; MMC approved and closed a loan with a high loan to value ratio on a property that was less than one year old; and MMC failed to resolve discrepancies in documents used to originate FHA insured mortgages.

24. Marathon Financial Corporation, Southfield, MI

Action: Settlement Agreement signed June 1, 2001. Without admitting fault or liability, Marathon Financial Corporation (“MFC”) agreed to a civil money penalty of $15,000. MFC also agreed to indemnify HUD for any losses incurred in one loan.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: MFC failed to make timely payments of Upfront Mortgage Insurance Premiums; MFC shared office space and commingled employees with Miracle Financial, a non-HUD approved lender; MFC failed to obtain and analyze the terms and conditions of the real estate transaction to consider the acquisition cost of recently acquired properties in the underwriting of loans; MFC failed to properly verify the source and adequacy of funds for the down payment and/or closing cost; MFC charged borrowers fees which are not in compliance with HUD/FHA guidelines; and MFC failed to maintain and implement a quality control plan in compliance with HUD requirements.

25. Marketplace Home Mortgage, LLC, Edina, MN

Action: Settlement Agreement signed July 25, 2001. Without admitting fault or liability, Marketplace Home Mortgage, LLC (“MHM”) agreed to a civil money penalty of $20,000. In addition, MHM agreed to indemnify HUD for any losses incurred on 4 loans.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: MHM allowed a non-FHA approved entity to originate 6 HUD/FHA loans that were registered with the Department as loans originated by MHM; and MHM failed to file annual loan origination reports for 1996-1997, which supplements the requirements of the Home Mortgage Disclosure Act.

26. Megamerica Mortgage Group, Inc., San Antonio, TX

Action: Settlement Agreement signed May 3, 2001. Without admitting fault or liability, Megamerica Mortgage Group, Inc. (“Megamerica”) agreed to indemnify HUD for any losses incurred on 5 loans.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: Megamerica recruited non-HUD approved entities and allowed non-Megamerica employees to originate loans which Megamerica processed and submitted to be approved for FHA insurance; Megamerica allowed prohibited branch arrangements; Megamerica signed false Lender Certifications contained in addenda to the Uniform Residential Loan Applications; Megamerica made prohibited payments to entities that both prepared loan applications and received real estate commissions on the same FHA loan transactions; Megamerica failed to disclose payments to brokers on the HUD-1 Settlement Statements; and Megamerica failed to maintain complete loan files for a minimum period of two years from the date of insurance endorsement.

27. Mission Hills Mortgage Corporation, Santa Ana, CA

Action: Settlement Agreement signed July 25, 2001. Without admitting fault or liability, Mission Hills Mortgage Corporation (“MHMC”) agreed to a civil money penalty of $60,000. In addition, MHMC agreed to indemnify HUD for any losses incurred on 15 loans. Further, MHMC agreed to audit its FHA/HUD loan files for a specific time period and refund any unallowable fees to mortgagors.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: MHMC failed to maintain and implement a quality control plan in compliance with HUD requirements; MHMC provided false information in originating and obtaining HUD/FHA mortgage insurance in one loan; MHMC failed to properly verify the source and adequacy of funds for the down-payment and/or closing; MHMC failed to properly verify credit history; MHMC failed to provide acceptable compensating factors for high ratios; MHMC failed to evaluate properly effective income; MHMC charged unallowable fees; MHMC failed to resolve discrepancies; MHMC failed to include liabilities in one loan; and MHMC failed to maintain complete origination files.

28. Molton, Allen & Williams Corporation, Birmingham, AL

Action: Settlement Agreement signed September 18, 2001. Without admitting fault or liability, Molton, Allen & Williams Corporation (“MAWC”) agreed to indemnify HUD for any losses incurred on 2 loans.

Cause: HUD's Departmental Enforcement Center made the following finding of violations of HUD/FHA requirements resulting from a Quality Assurance Division review of Colonial Atlantic Mortgage, a loan correspondent that MAWC sponsored: MAWC failed to properly verify the source and adequacy of funds for the down payment or income requirements in two loans.

29. Money Line Classic Corporation, Whittier CA

Action: In a letter dated July 26, 2001, the Board voted to impose a civil money Start Printed Page 63722penalty on Money Line Classic Corporation (“MLCC”) of $45,000.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: MLCC failed to maintain and implement a Quality Control Plan in compliance with HUD requirements; MLCC failed to notify the Department of program abuses; MLCC failed to designate a senior corporate officer to conduct exclusively the affairs of MLCC during normal business hours; MLCC failed to provide office space that is clearly identified to the public; and MLCC failed to retain complete origination files.

30. Mortgage Loan Specialists, Inc., Solana Beach, CA

Action: Settlement Agreement signed July 18, 2001. Without admitting fault or liability, Mortgage Loan Specialists, Inc. (“MLS”) agreed to a civil money penalty of $192,500.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: MLS allowed prohibited branch arrangements or net branches; MLS failed to file annual loan origination reports for 1997-1999, which supplements the requirements of the Home Mortgage Disclosure Act; and MLS failed to maintain and implement a Quality Control Plan.

31. MortgageOne Financial Services, Kissimmee, FL

Action: Settlement Agreement signed May 21, 2001. Without admitting fault or liability, MortgageOne Financial Services (“MOFS”) agreed to a civil money penalty of $10,000.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: MOFS failed to implement a Quality Control Plan in compliance with HUD/FHA requirements; MOFS failed to assure that interested third parties did not participate in the origination and/or processing of loans to be insured by the Department; and MOFS falsely certified loan documents to obtain HUD/FHA insurance.

32. Mortgage One, Inc., Minneapolis, MN

Action: Settlement Agreement signed July 25, 2001. Without admitting fault or liability, Mortgage One, Inc. (“MOI”) agreed to a civil money penalty of $15,000.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: MOI failed to maintain and implement a Quality Control Plan; MOI failed to file annual loan origination reports for 1996-1998, which supplements the requirements of the Home Mortgage Disclosure Act; MOI failed to conduct face-to-face interviews with four first time home buyers; MOI allowed non-MOI employees in six cases to take loan applications and process paperwork on HUD/FHA insured mortgages; and MOI used false information in originating seven loans and obtaining HUD/FHA mortgage insurance.

33. Norwest Mortgage, Inc., Des Moines, IA

Action: Settlement Agreement signed May 3, 2001. Without admitting fault or liability, Norwest Mortgage, Inc., now known as Wells Fargo Home Mortgage, Inc., (“Norwest”) agreed to a civil money penalty of $75,000. Norwest also agreed to indemnify HUD for any losses incurred, including interest, from Norwest's submission of insurance claims on 39 loans that were subject to a 1996 settlement agreement. [For the prior Federal Register notice on the proposed settlement agreement, see 65 FR at 53736, September 5, 2000.]

Cause: Contrary to the terms of a March 22, 1996 Settlement Agreement, Norwest submitted claims for FHA insurance on 39 loans on which Norwest had agreed to not submit such claims.

34. PMA Mortgage, Inc., Long Beach, CA

Action: In a letter dated August 14, 2001, the Board withdrew PMA Mortgage, Inc.”s (“PMA”) HUD/FHA approval for three years.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: PMA failed to maintain and implement a quality control plan in compliance with HUD requirements; PMA used falsified documentation and/or conflicting information in originating loans and obtaining HUD/FHA mortgage insurance; PMA failed to properly verify the source and adequacy of funds for the down payment and/or closing costs; PMA failed to identify sales within the last 12 months on appraisals; and PMA requested a seller to backdate loan documents.

35. RBMG, Inc., Columbia SC

Action: Settlement Agreement signed September 25, 2001. Without admitting fault or liability, RBMG agreed to indemnify HUD for any losses incurred on six loans.

Cause: HUD's Quality Assurance Division made the following finding of violations of HUD/FHA requirements: RBMG failed to properly verify the source and adequacy of funds for the down payment or income requirements in six loans.

36. Twins, Inc., Columbia, SC

Action: Settlement Agreement signed May 21, 2001. Without admitting fault or liability, Twins, Inc. (“TI”) agreed to a civil money penalty of $8,000. In addition, the Department reinstated TI as an FHA approved mortgagee. The Board had previously withdrawn TI's HUD/FHA approval for three years in a letter dated September 29, 2000. [For the prior Federal Register notice on the proposed settlement agreement, see 65 FR at 53737, September 5, 2000.]

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: TI shared office space with its parent company and maintained an office not clearly identified to the public; TI commingled employees with its parent company; TI used more than one entity to conduct its loan origination function; TI failed to maintain an adequate Quality Control Plan for the origination of HUD/FHA insured mortgages; TI failed to properly implement its Quality Control Plan; and TI charged mortgagors unallowable fees.

37. U.S. Lending Corporation, Long Beach, CA

Action: In a letter dated July 26, 2001, the Board withdrew U.S. Lending Corporation's (“USLC”) HUD/FHA approval for five years. In addition, the Board voted to impose a civil money penalty of $35,000.

Cause: While preparing for an administrative hearing against Milestone Mortgage Corporation, HUD's Mortgagee Review Board staff learned that Milestone, despite its immediate withdrawal from FHA programs was operating under the name of U.S. Lending Corporation and was still originating FHA insured loans. The Board voted to immediately withdraw USLC's approval based on the following violations of HUD/FHA requirements: USLC circumvented the Mortgagee Review Board's withdrawal action against Milestone Mortgage Corporation; USLC failed to exclude participants that are suspended from participating in federal government programs; USLC Start Printed Page 63723used non FHA approved offices to originate FHA insured mortgages; USLC failed to maintain complete origination files; USLC failed to maintain an office space that was separate and apart from that of another entity; USLC failed to meet the staffing requirement of at least two full-time employees at a main office; USLC failed to follow proper quality control procedures; and USLC failed to establish and maintain an adequate Quality Control Plan for the origination of HUD/FHA insured mortgages. [For the prior Federal Register notice relating to Milestone Mortgage Corporation, see 66 FR at page 38307, July 23, 2001.]

38. Valley Mortgage Company, Inc., McAllen, TX

Action: Settlement Agreement signed August 28, 2001. Without admitting fault or liability, Valley Mortgage Company, Inc., (“VMCI”) agreed to a civil money penalty of $25,000. VMCI also agreed to indemnify HUD for any losses incurred on 11 loans. At the time of settlement, VMCI paid HUD an additional $77,604.22 for losses incurred on three loans upon which HUD had paid claims and had sold the property.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: VMCI failed to verify the source of funds for closing and/or to pay off debts; VMCI used inaccurate and/or unstable income to qualify mortgagors; VMCI omitted mortgagor liabilities and/or the liabilities of the non-purchasing spouse in one loan qualification; VMCI failed to adequately document mortgagors' credit histories in one loan; VMCI failed to update credit documents in excess of 120 days at the time of closing; VMCI failed to clarify or document important file discrepancies in one loan; VMCI closed a loan in excess of the maximum allowable resulting in an over-insured mortgage; and VMCI failed to perform sufficient investigation and analysis to certify that a condominium project satisfied the eligibility criteria for a “spot loan'.

39. West Coast Mortgage Securities, Inc., San Diego, CA

Action: Settlement Agreement signed August 28, 2001. Without admitting fault or liability, West Coast Mortgage Securities, Inc., (“WCMS”) agreed to a civil money penalty of $1,000.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: WCMS failed to file annual loan origination reports for 1995-1999, which supplements the requirements of the Home Mortgage Disclosure Act; and WCMS failed to properly document liabilities.

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Dated: December 3, 2001.

John C. Weicher,

Assistant Secretary for Housing—FHA, Commissioner, Chairman, Mortgagee Review Board.

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[FR Doc. 01-30438 Filed 12-7-01; 8:45 am]

BILLING CODE 4210-27-P