Lend America, VP Ashley Banned from FHA

Michael Ashley, the embattled former vice president of Federal Housing Administration (FHA)-backed mortgage originator Lend America, and the company he worked for, were permanently banned from doing business in the industry last week. The court judgment, issued in New York on March 3, brings to a close a nearly five-month-long ordeal that began in October when 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. Lend America, with Ashley at the helm, had grown to become one of the most widely recognized originators of FHA-backed mortgages, using television commercials and a sponsorship agreement with his motorsports race team. But HUD and the Department of Justice (DOJ) would later allege Ashley fostered an environment that encouraged Lend America sales staff to originate FHA loans, even when borrowers were not eligible. In his meetings with sales staff, the suit claims, Ashley told them there were “no minimum credit score requirements” for FHA loans and that it was okay if a borrower made late payments on previous mortgages. In the court ruling, Ashley did not admit or deny liability regarding the allegations, but he is permanently banned from originating, marketing or submitting claims for FHA mortgages, according to media reports. Ashley is also prohibited from being employed in any capacity, including as a strategist or consultant, for any company connected to the FHA. In December, the FHA withdrew its approval from Ideal Mortgage Bankers. In addition, Ginnie Mae defaulted Lend America, preventing it from issuing Ginnie mortgage-backed securities (MBS) that bear the full faith and credit of the US government. As HousingWire previously reported in October, Ashley’s career in the mortgage industry has been fraught with allegations of improper behavior. According to the 155-page lawsuit against Ideal Mortgage Bankers and Ashley, the mortgage executive worked in a number of positions at mortgage firms, and by his own admission, committed his first act of mortgage fraud in 1989. In 1991, Ashley and Liberty Mortgage Banking, a company his father owned, surrendered their New York mortgage licenses and Liberty gave up its status as a HUD-approved lender. In 1993, Ashley pled guilty to three counts of conspiracy to commit wire fraud in connection with multiple instances of mortgage fraud. In 1996, he was sentenced to five years probation, including two months home confinement and was ordered to pay restitution to Freddie Mac (FRE). In 1994, Liberty was found guilty of two counts of wire fraud in a jury trial and in the same year, was sentenced to a $1m fine. Despite his background and history of fraudulent behavior, and his temporary industry ban, Ashley continued to find work in the mortgage world. According to the lawsuit, from 1996 to 2001, Ashley increased loan volume 525% from $80m in loans to $500m loans during his second stint at Consumer Home Mortgage, where he served in a variety of roles, including sales manager, vice president of marketing, president and chief financial officer. His career would later take him into leadership roles at Lend America, where, according to the lawsuit, under Ashley’s leadership Sales staff could make 10 times the commission on FHA loans than on standard mortgages and almost four times the commission than a subprime mortgage. The suit claims Ashley set a sales goal of one loan origination per week and told loan officers “loans should not be closed in two weeks or a month, but in eight hours.” In addition the suit claimed, Ashley told sales staff those who did not originate large numbers of FHA-insured mortgages would be terminated from employment at Lend America and that he would fire the lower producing members of his sales staff. Write to Austin Kilgore. The author held no relevant investments.