HUD Notes Alleged FHA Violations at Lend America

[Update 1: Adds Ideal Mortgage Bankers statement] The Department of Housing and Urban Development’s (HUD) Mortgagee Review Board issued a notice of violation against Ideal Mortgage Bankers, parent company of Lend America and Lending Key. HUD notified the company Tuesday of violations of the Federal Housing Administration’s (FHA) origination and underwriting requirements it said it uncovered. The 12 alleged violations the HUD board said Ideal Mortgage Bankers made against FHA range from submitting false certifications and failing to document the borrower’s income and creditworthiness, to approving loans that did not meet the FHA’s minimum credit requirements and closing a loan with an excessive mortgage broker fee paid to an approved FHA loan correspondent. In addition, HUD notified four of the company’s underwriters of plans to suspend or propose debarments for their alleged actions in connection to the violations. HUD alleges these underwriters falsely certified that the loans in question were originated in compliance with FHA requirements and were eligible for FHA mortgage insurance. Separately, HUD issued pre-penalty notices to the underwriters advising them the department is considering imposing civil money penalties against them as well. Ideal Mortgage Bankers and the individual underwriters have 30 days to respond to the notices. The US Attorney for the Eastern District of New York is seeking a temporary restraining order against Ideal to prevent it from originating any new FHA-insured mortgages while federal prosecutors pursue a Civil Fraud Injunction against the Company, HUD said. “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. “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.” In a prepared statement, Ideal said, “The company was taken by surprise, expects to continue in business and will respond more completely once all allegations are reviewed.” Write to Austin Kilgore.