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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 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 Seventh Street, SW., Washington, DC 20410, telephone: (202) 708-3041 extension 3574 (this is not a toll-free number). A Telecommunications Device for Hearing and Speech-Impaired Individuals 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 given of administrative actions that have been taken by the Mortgagee Review Board from October 1, 2001 through December 31, 2001.

1. Ambassador Mortgage Corporation, Turnersville, NJ

Action: In a letter dated December 10, 2001, the Board proposed the withdrawal of Ambassador Mortgage Corporation's (“AMC”) HUD/FHA approval for three years.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: AMC employed loan officers who were not exclusive employees; AMC failed to provide complete loan origination files for review; and AMC failed to implement and maintain a Quality Control Plan.

2. Capital Mortgage Services/Siwell, Inc., Lubbock, TX

Action: Settlement Agreement signed December 4, 2001. Without admitting fault or liability, Capital Mortgage Services/Siwell, Inc. (“CMS”) agreed to a payment of $1,000.

Cause: HUD received a complaint from an FHA mortgagor which revealed the following violations of HUD/FHA requirements: CMS failed to comply with HUD/FHA's Loss Mitigation policies and failed to provide appropriate loan servicing using required loss mitigation tools; and CMS terminated FHA Mortgage Insurance without the mortgagor's approval.

3. CBSK Financial Group, Inc., Santa Ana, CA

Action: Settlement Agreement signed November 6, 2001. Without admitting fault or liability, CBSK Financial Group, Inc. (“CBSK”) agreed to a payment of $500,000. In addition, CBSK refunded unallowable fees to 18 mortgagors.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: CBSK operated branch offices in Oklahoma and Utah under prohibited branch arrangements; CBSK failed to implement adequate branch office quality control procedures; CBSK failed to ensure unallowable fees were not charged to mortgagors; and CBSK failed to retain complete loan origination files. Start Printed Page 14958

4. Chase Mortgage Company—West, f/k/a Mellon Mortgage Company, Houston, TX

Action: Settlement Agreement signed October 16, 2001. Without admitting fault or liability, Chase Mortgage Company—West, f/k/a Mellon Mortgage Company, (“CMCW”) agreed to a payment of $236,500. CMCW also agreed to indemnify HUD for any losses incurred on 35 loans.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: Mellon Mortgage Company (“MMC”) failed to comply with HUD's Loss Mitigation policies and procedures; MMC failed to maintain a current and accurate Quality Control Plan and to properly implement the plan; and MMC failed to properly report under HUD's Single Family Default Monitoring System (SFDMS).

5. Continental Capital Corporation, Huntington Station, NY

Action: By memorandum dated November 8, 2001, the Board referred for Administrative Offset losses that HUD incurred on a loan originated by Continental Capital Corporation (“CCC”) that was subject to a 1997 settlement agreement for indemnification.

Cause: CCC failed to comply with the terms of an Indemnification Agreement with the Mortgagee Review Board.

6. Foundation Funding Group, Inc., d/b/a Greatstone Mortgage, Tampa, FL

Action: In a letter dated November 28, 2001, the Board permanently withdrew Foundation Funding Group, Inc.'s (d/b/a Greatstone Mortgage, “FFGI”) HUD/FHA approval.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: FFGI allowed improper charges to be financed into new mortgages; FFGI improperly allowed co-borrowers to be removed from the mortgage note; FFGI refinanced fixed rate mortgages into adjustable rate mortgages in a manner that violated HUD/FHA requirements; FFGI provided improper cash-out on streamline refinanced loans; and FFGI failed to have a Quality Control Plan that complied with HUD/FHA requirements.

7. GHI Corporation, d/b/a U.S. Capital Mortgage, Miami, FL

Action: Settlement Agreement signed December 18, 2001. Without admitting fault or liability, GHI Corporation, d/b/a U.S. Capital Mortgage (“GHI”) agreed to a civil money penalty of $7,000.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: GHI failed to file an annual loan origination report for 1998, which supplements the requirements of the Home Mortgage Disclosure Act; GHI failed to establish, maintain, and implement a Quality Control Plan in compliance with HUD/FHA requirements; GHI allowed interested third parties to participate in the origination of two HUD/FHA insured loans; and GHI failed to maintain complete loan origination files for three loans.

8. Heartland Mortgage, Inc., Tucson, AZ

Action: Settlement Agreement signed December 18, 2001. Without admitting fault or liability, Heartland Mortgage, Inc. (“HMI”) agreed to a civil money penalty of $5,000. [This settlement agreement resolves the civil money penalty matter previously voted on by the Board. It does not change HUD's withdrawal of Heartland's HUD/FHA approval for three years, as noted in 66 FR at 38305 (July 23, 2001).]

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: HMI failed to implement a Quality Control Plan; HMI failed to file annual loan origination reports for 1997 and 1998 which supplements the requirements of the Home Mortgage Disclosure Act; HMI employed two loan officers who were also real estate agents/brokers; HMI failed to properly document gift letters in two loans; HMI failed to properly document liabilities in one loan; and HMI failed to maintain complete loan origination files in 7 loans.

9. Legacy Mortgage, Provo, Utah

Action: In a letter dated December 5, 2001, the Board proposed the withdrawal of Legacy Mortgage's (“Legacy”) HUD/FHA approval for three years. In addition, the Board voted to impose a civil money penalty of $55,000.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: Legacy failed to remit Up-Front Mortgage Insurance Premiums to HUD/FHA within 15 days of closing for 173 loans and failed to segregate escrow funds from operational funds; Legacy failed to submit loans for endorsement within 60 days after loan closing for 146 loans; Legacy failed to properly verify the source and adequacy of funds for the downpayment and/or closing costs for five loans; Legacy failed to properly verify and analyze income in two loans; Legacy failed to ensure property eligibility for HUD/FHA mortgage insurance in four loans; Legacy failed to properly qualify the mortgagors in three loans; and Legacy failed to recognize and adjust for “inducements to purchase” in two loans.

10. Litton Loan Servicing, LP, Houston, TX

Action: Settlement Agreement signed December 4, 2001. Without admitting fault or liability, Litton Loan Servicing, LP, (“LLSI”) agreed to a payment of $35,000.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: LLSI failed to perform or to document appropriate loan servicing activities; and LLSI failed to consider loss mitigation alternatives when loans were in default or prior to initiating foreclosure.

11. McSwain Mortgage Company, f/k/a HomeLink Mortgage Company, LLC, Memphis, TN

Action: In a letter dated November 28, 2001, the Board proposed the withdrawal of McSwain Mortgage Company's (f/k/a HomeLink Mortgage Company, “HLM”) HUD/FHA approval for three years. In addition, the Board voted to impose a civil money penalty of $36,000.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: HLM violated the Department's conflict of interest prohibited payments provisions; HLM failed to establish, maintain and implement a Quality Control Plan for the origination of FHA insured mortgages; and HLM failed to be clearly identified to the general public.

12. Northstar Mortgage Corporation, Dallas, TX

Action: Settlement Agreement signed December 12, 2001. Without admitting fault or liability, Northstar Mortgage Corporation, (“NSMC”) agreed to a civil Start Printed Page 14959money penalty of $13,000. NSMC also agreed to indemnify HUD for any losses incurred on two loans.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: NSMC approved loan applications originated and processed by personnel not employed by NSCM or Capitol State Mortgage Corporation, its loan correspondent; NSMC failed to accurately calculate the mortgagor's income and to justify the income used on one loan; NSMC failed to verify or adequately document the source of funds required for closing on two loans.

13. Platinum Capital Group, Inc., Manhattan Beach, CA

Action: Settlement Agreement signed December 28, 2001. Without admitting fault or liability, Platinum Capital Group, Inc., (“PCG”) agreed to a civil money penalty of $21,500. PCG also agreed to indemnify HUD for any losses incurred on two loans.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: PCG failed to maintain and implement a quality control plan in compliance with HUD requirements; PCG failed to engage in business practices that conform to generally accepted practices of prudent mortgagees; PCG employed loan officers that were not exclusive employees of PCG; PCG failed to ensure that gift letters contained all required information; and PCG failed to ensure compliance with HUD/FHA's ban on loans to private investors.

14. Traditional Bankers Mortgage Corporation, Ponce, PR

Action: Settlement Agreement signed December 28, 2001. Without admitting fault or liability, Traditional Bankers Mortgage Corporation, (“TBMC”) agreed to a civil money penalty of $40,000. TBMC also agreed to indemnify HUD for any losses incurred on nine loans.

Cause: HUD's Quality Assurance Division made the following findings of violations of HUD/FHA requirements: TBMC allowed lenders not approved by HUD/FHA to participate in the origination and processing of loans insured by the Department; TBMC allowed non-employees to participate in the origination of loans insured by HUD/FHA; TBMC failed to resolve conflicting information regarding a borrower's employment; TBMC failed to properly verify the borrower's source of funds for down payment and/or closing costs; TBMC failed to properly verify the borrowers' effective income; TBMC failed to properly address conflicting and/or derogatory credit information; TBMC failed to resolve inconsistencies on the property appraisal reports; TBMC submitted an unacceptable loan for FHA insurance; TBMC failed to be clearly identified to the general public; and TBMC failed to establish, maintain, and implement a Quality Control Plan for the origination of HUD/FHA insured mortgages.

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Dated: March 20, 2002.

John C. Weicher,

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

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[FR Doc. 02-7389 Filed 3-27-02; 8:45 am]

BILLING CODE 4210-27-P