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Notice

Mortgagee Review Board: Administrative Actions

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ACTION:

Notice.

SUMMARY:

In compliance with section 202(c)(5) of the National Housing Act, this notice advises of the cause and description of administrative actions taken by HUD's Mortgagee Review Board against HUD-approved mortgagees.

FOR FURTHER INFORMATION CONTACT:

Nancy A. Murray, Secretary to the Mortgagee Review Board, 451 Seventh Street SW., Room B-133/3150, Washington, DC, 20410-8000; telephone (202) 708-2224 (this is not a toll-free number). Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Information Service at (800) 877-8339.

SUPPLEMENTARY INFORMATION:

Section 202(c)(5) of the National Housing Act (12 U.S.C. 1708(c)(5)) 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 (“Board”). In compliance with the requirements of Section 202(c) (5), this notice advises of actions that have been taken by the Board from August 1, 2011 to December 31, 2011.

I. Settlement Agreements, Civil Money Penalties, Withdrawals of FHA Approval, Suspensions, Probations, Reprimands, and Administrative Payments

1. Euro Mortgage Bankers, Inc., Melville, NY [Docket No. 11-1120-MR]

Action: On November 30, 2011, the Board issued a Notice of Administrative Action permanently withdrawing the FHA approval of Euro Mortgage Bankers, Inc. (“EMB”).

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: EMB used falsified and/or conflicting information in the origination of HUD/FHA loans; failed to ensure loan applications were taken and processed by authorized employees; failed to ensure that documents were not handled by an interested third party; failed to adequately document the income used to qualify the borrower; failed to document the source of funds used for the downpayment and/or closing costs; failed to perform quality control on all loans that went into default within the first six months; and failed to timely submit audited financial statements and supplementary reports to HUD.

2. Superior Mortgage Corporation, Hammonton, NJ [Docket No. 11-1177-MR]

Action: On October 11, 2011, the Board entered into a Settlement Agreement with Superior Mortgage Corporation (“Superior”) that required Superior to pay a civil money penalty in the amount of $10,000, without admitting fault or liability.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: Superior failed to notify the Department that it had paid a fine in the amount of $30,000 to the Department of Banking of the Commonwealth of Pennsylvania; failed to ensure that only principal owners or corporate officers submit the annual certification report; and submitted a false certification to HUD when it submitted its electronic annual certification for 2011.

3. Town Square Mortgage & Investments, Inc., Frisco, TX [Docket No. 11-1194-MR]

Action: On September 20, 2011, the Board entered into a Settlement Agreement with Town Square Mortgage & Investments, Inc. (“Town Square Mortgage”) that required Town Square Mortgage to pay a civil money penalty in the amount of $11,000, without admitting fault or liability.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: Town Square Mortgage submitted false audited financial statements to HUD for Fiscal Year ending April 30, 2010, when it claimed ownership of a residential condominium unit located in Apollo Beach, Florida; submitted audited financial statements to HUD that were not in conformity with Generally Accepted Accounting Principles due to the improper capitalization of a residential condominium unit; and displayed the FHA/HUD logo on its Web site when promoting its FHA mortgage services.

4. Wall Street Financial Corporation, Fairfield, NJ [Docket No. 11-1179-MR]

Action: On November 8, 2011, the Board issued a Notice of Administrative Action withdrawing the FHA approval of Wall Street Financial Corporation (“WSFC”) for a period of one year.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: WSFC failed to timely submit or complete its audited financial statements for its fiscal year ending December 31, 2010; failed to pay its annual certification fee; and failed to submit its annual certification for 2010.

5. Franklin American Mortgage Company, Franklin, TN [Docket No. 11-1202-MR]

Action: On October 4, 2011, the Board entered into a Settlement Agreement with Franklin American Mortgage Company (“FAMC”) that required FAMC to pay a civil money penalty in the amount of $14,500, without admitting fault or liability.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: FAMC failed to notify HUD that it paid a fine in the amount of $6,750 to the Department of Banking of the Commonwealth of Pennsylvania to resolve allegations that FAMC had violated the Mortgage Licensing Act, and submitted a false certification to HUD when it submitted it electronic annual certification for 2011.

6. Midland Mortgage Co., Oklahoma City, OK [Docket No. 10-1999-MR]

Action: On November 23, 2011, the Board entered into a Settlement Agreement with Midland Mortgage Company (“MMC”) that required MMC, without admitting fault or liability, to pay a civil money penalty in the amount of $1,300,000 and to pay all outstanding mortgage insurance premiums owed to HUD.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: MMC failed to remit mortgage insurance premiums to HUD/FHA on 3,438 loans, and failed to notify HUD/FHA within fifteen (15) days of the termination of 2,488 contracts for mortgage insurance.

7. UnionFederal Mortgage Corporation, Nanuet, NY [Docket No. 11-1205-MR]

Action: On November 30, 2011, the Board issued a Notice of Administrative Action withdrawing the FHA approval of UnionFederal Mortgage Corporation (“UFMC”) for a period of one year.

Cause: The Board took this action based on the following violation of HUD/FHA requirements alleged by HUD: UFMC failed to notify HUD that it voluntarily surrendered its license to the New York State Banking Department on or about October 20, 2010.

8. Vanguard Funding, LLC, Garden City, NY [Docket No. 11-1102-MR]

Action: On November 28, 2011, the Board entered into a Settlement Agreement with Vanguard Funding, LLC (“VF”) that required VF, without admitting fault or liability, to pay a civil money penalty in the amount of $101,500, to indemnify HUD against losses relating to five (5) FHA-insured loans for a period of five (5) years from the date of the Settlement Agreement, and to require third party training for its underwriters.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: VF failed to notify HUD within ten (10) business days that it was the subject of two state enforcement actions prohibiting it from originating mortgages; VF originated six (6) FHA-insured mortgages in the state of New York while it was the subject of an order from the state of New York suspending its mortgage banker license; VF permitted a non-FHA approved mortgage broker to perform loan origination services on two (2) FHA-insured loans; VF approved three (3) loans for borrowers who were ineligible for federally insured mortgages due to outstanding delinquent federal debt; VF approved two (2) FHA-insured loans without adequately documenting the income used to qualify the borrowers; VF approved three (3) FHA-insured loans without resolving discrepancies in the loan files relating to the borrowers' income and employment; VF failed to document the source of gift funds on three (3) FHA-insured loans; VF approved a loan when the borrower did not meet the minimum credit requirements; VF approved one loan where it omitted a liability of the borrower in the underwriting analysis; VF accepted three (3) loan applications from loan correspondents for which VF was not an FHA approved Sponsor; and VF failed to review five (5) FHA-insured loans that went into early payment default within the first six (6) months of repayment.

9. Wells Fargo Bank, N.A., Minneapolis, MN [Docket No. 11-1183-MR]

Action: On December 20, 2011, the Board issued a letter of reprimand to Wells Fargo Bank, N.A. (“Wells Fargo”).

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: Wells Fargo failed to comply with property preservation and protection requirements on two (2) HUD-insured homes following foreclosure.

10. MetLife Bank, N.A., Bridgewater, NJ [Docket No. 11-1148-MR]

Action: On December 12, 2011, the Board entered into a Settlement Agreement with MetLife Bank, N.A. (“MetLife”) that required MetLife, without admitting fault or liability, to pay an administrative payment in the amount of $41,250 and waive all insurance benefits or indemnify HUD against any losses relating to eleven (11) FHA-insured mortgages for a period of five (5) years from the date of the Settlement Agreement.

Cause: The Board took this action based on the following violations of HUD/FHA requirements self-reported by MetLife: MetLife violated HUD/FHA requirements when it approved eleven (11) FHA-insured loans without identifying irregularities and resolving discrepancies and conflicting information in the loan files; MetLife violated HUD/FHA requirements on six (6) FHA-insured loans when it failed to adequately document the borrowers' income; MetLife violated HUD/FHA requirements when it approved four (4) FHA-insured loans after failing to ensure that documents were not handled by an interested third party; MetLife violated HUD/FHA requirements on four (4) FHA-insured transactions when it failed to document the source of funds used for the borrowers' down- payments and/or closing costs; MetLife violated HUD/FHA requirements when it approved three (3) FHA-insured loans and omitted monthly debt obligations from its underwriting analysis; MetLife violated HUD/FHA requirements when it approved an FHA-insured loan for a borrower who was ineligible because of an outstanding court-ordered judgment; MetLife violated HUD/FHA requirements when it approved a loan for FHA mortgage insurance without ensuring the borrower met the statutory 3.5% minimum investment requirement; and MetLife violated HUD/FHA requirements when it approved a loan for a borrower that was over-insured by $3,598.54, because it had failed to consider the seller's inducement to purchase.

11. Reliance First Capital, LLC Melville, NY [Docket No. 11-1203-MR]

Action: On December 22, 2011, the Board entered into a Settlement Agreement with Reliance First Capital, LLC (“Reliance”) that required Reliance to pay a civil money penalty in the amount of $11,000, without admitting fault or liability.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: Reliance failed to notify HUD that it agreed to pay a fine in the amount of $5,000 to the Department of Banking of the Commonwealth of Pennsylvania, and submitted a false certification to HUD when it submitted its electronic annual certification for 2011.

12. Virginia Commonwealth Bank, Petersburg, VA [Docket No. 11-1273-MR]

Action: On December 8, 2011, the Board entered into a Settlement Agreement with Virginia Commonwealth Bank (“VCB”) that required VCB, without admitting fault or liability, to pay a civil money penalty in the amount of $6,725 and to remit all outstanding mortgage insurance premiums and late fees owed to HUD.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: VCB failed to timely remit mortgage insurance premiums on forty-four (44) loans.

13. E Mortgage Management, LLC, Haddon Township, NJ [Docket No. 11-1200-MR]

Action: On February 3, 2012, the Board entered into a Settlement Agreement with E Mortgage Management, LLC (“EMM”) that required EMM to pay a civil money penalty in the amount of $14,500, without admitting fault or liability.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: EMM failed to notify HUD that EMM agreed to pay a fine in the amount of $61,500 to the Department of Banking of the Commonwealth of Pennsylvania, and submitted a false certification to HUD when it submitted its electronic Annual Certifications for 2011.

14. Master Mortgage Corporation, Bayamon, PR [Docket No. 11-1147-MR]

Action: On February 3, 2012, the Board issued a Notice of Administrative Action withdrawing the FHA approval of Master Mortgage Corporation (“MMC”) for five years.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: MMC failed to timely submit audited financial statements and supplementary reports to HUD, and failed to notify HUD that MMC and MMC's President were issued a Complaint and Cease and Desist Order from the Commissioner of Financial Institutions of Puerto Rico that required MMC to pay fines totaling $280,000, ordered MMC to permanently cease and desist from operating and engaging in the business of a mortgage institution in Puerto Rico, required MMC to immediately surrender its mortgage institution's license, and barred MMC's president from serving as an officer, director, or owner of any financial institution.

15. Clarion Mortgage Capital, Inc., Greenwood Village, CO [Docket No. 10-1798-MR]

Action: On February 23, 2011, the Board entered into a Settlement Agreement with Clarion Mortgage Capital, Inc. (“Clarion”) that required Clarion to pay a civil money penalty in the amount of $45,000, without admitting fault or liability.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: Clarion failed to comply with HUD's quality control requirements; violated HUD's mortgagee employee and staffing requirements; and charged unallowable and unsupported fees.

16. PHH Home Loans, LLC, Mount Laurel, NJ [Docket No. 11-1201-MR]

Action: On February 15, 2012, the Board entered into a Settlement Agreement with PHH Home Loans, LLC (“PHH”) that required PHH to pay a civil money penalty in the amount of $14,500, without admitting fault or liability.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: PHH failed to notify HUD that PHH agreed to pay a fine of $11,750 to the Department of Banking of the Commonwealth of Pennsylvania; failed to notify HUD that it paid a fine of $50,000 to the Illinois Department of Financial and Professional Regulation; and submitted a false certification to HUD when it submitted its electronic annual certification for 2011.

17. HomeState Mortgage Company, LLC, Anchorage, AK [Docket No. 11-1286-MR]

Action: On April 3, 2012, the Board entered into a Settlement Agreement with HomeState Mortgage Company, LLC (“HMC”) that required HMC, without admitting fault or liability, to pay a civil money penalty in the amount of $15,000 and to complete a six-month period of probation, during which time HMC must submit all marketing materials to HUD on a quarterly basis for review and approval.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: HMC reproduced the official HUD seal on an advertisement or business solicitation, and disseminated a misrepresentative or misleading advertisement or business solicitation to the public.

18. United Northern Mortgage Bankers, LTD, Levittown, NY [Docket No. 11-1149-MR]

Action: On March 16, 2012, the Board entered into a Settlement Agreement with United Northern Mortgage Bankers LTD (“UNMB”) that required UNMB, without admitting fault or liability, to pay a civil money penalty in the amount of $25,000, indemnify HUD against losses relating to two FHA-insured loans for a period of five years, and complete a six-month period of probation during which time UNMB must submit the results of its monthly QC audits and certifications as to its QC staffing and operations.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: UNMB failed to ensure that the quality control reviews for early payment defaults were completed; used conflicting information in originating and obtaining HUD/FHA mortgage insurance; and failed to adequately document the stability of income used to qualify the borrowers.

19. Fifth Third Bank, Cincinnati, OH [Docket No. 10-1998-MR]

Action: On April 27, 2012, the Board entered into a Settlement Agreement with Fifth Third Bank (“Fifth Third”) that required Fifth Third to pay a civil money penalty in the amount of $700,000, without admitting fault or liability.

Cause: The Board took this action based on the following violations of HUD/FHA requirements alleged by HUD: Fifth Third failed to timely remit mortgage insurance premiums to HUD/FHA, and failed to notify HUD/FHA within 15 calendar days of the termination, transfer or sale of mortgage insurance contracts.

II. Lenders That Failed To Timely Meet Requirements for Annual Recertification of HUD/FHA Approval

Action: The Board entered into settlement agreements with the lenders listed below, which required the lender to pay a $7,500 or $3,500 civil money penalty, without admitting fault or liability.

Cause: The Board took this action based upon allegations that the lenders listed below failed to comply with the Department's annual recertification requirements in a timely manner.

1. Anchor Funding Corporation, Norcross, GA ($7,500.00) [Docket No. 11-1225-MRT]

2. Freyre Mortgage Corp., San Juan, PR. ($3,500.00) [Docket No. 11-1229-MRT ]

III. Lenders That Failed To Meet Requirements for Annual Recertification of HUD/FHA Approval

Action: The Board voted to withdraw the FHA approval of each of the lenders listed below for a period of one year.

Cause: The Board took this action based upon allegations that the lenders listed below were not in compliance with the Department's annual recertification requirements.

1. First Home Mortgage, Inc., Jonesboro, AR [Docket No. 12-1642-MRT].

2. HCL Finance Inc., San Jose, CA [Docket No. 12-1641-MRT].

3. Ikon Mortgage Lenders, Inc., Fort Lauderdale, FL [Docket No. 09-9910-MRT].

4. Delta Home and Lending, Inc., Sacramento, CA [Docket No.12-1643-MRT].

5. Axiom Mortgage Bankers Corporation, Irvine, CA [Docket No. 11-1234-MRT].

6. Red Rock Mortgage & Lending, LLC., Oklahoma City, OK [Docket No. 11-1233-MRT].

Dated: August 31, 2012.

Carol J. Galante,

Acting Assistant Secretary for Housing-Federal Housing Commissioner.

[FR Doc. 2012-22126 Filed 9-7-12; 8:45 am]

BILLING CODE 4210-67-P