Two FHA-approved lenders penalized by HUD
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Two FHA-approved lenders penalized by HUD

November 5, 2009

The U.S. Department of Housing & Urban Development (HUD) has announced that its Mortgagee Review Board (MRB) is imposing civil monetary penalties totaling $27,000 on two FHA-approved lenders in Wisconsin and Connecticut for a variety of violations of FHA lending and marketing standards. In addition, the MRB reached tentative settlements with four other lenders and issued two Letters of Reprimand to lenders that HUD alleged violated FHA requirements. “There should be no doubt about the message we’re sending to our lenders,” said FHA Commissioner David Stevens. “FHA standards are there for a reason and we expect our lenders to follow them or pay the consequences. In today’s housing market, it is especially important that we work to reduce risk while being true to FHA’s mission to promote sustainable homeownership.”
HUD’s MRB is imposing civil money penalties against the following lenders:
►1st Rate Mortgage Corporation (Green Bay, Wisc.): 1st Rate is a non-supervised loan correspondent. HUD alleged that 1st rate violated HUD/FHA’s third-party origination restrictions, made false certifications concerning the compliance with these restrictions and failed to maintain a quality control plan in accordance with HUD/FHA requirements. The Board voted to impose Civil Money Penalties in the amount of $20,000.
► Access Mortgage Corporation (New Haven, Conn.): Access Mortgage Corporation is a non-supervised direct endorsement mortgagee headquartered in New Haven, Conn. HUD alleged that Access violated HUD/FHA requirements by improperly using the official FHA logo and failing to notify HUD of a change in its “d/b/a” name. The Board voted to impose Civil Money Penalties in the amount of $7,000.
Each lender will have an opportunity to challenge the imposition of civil money penalties and seek a hearing before an Administrative Law Judge.
HUD’s MRB has reached tentative settlements with the following lenders:
► Nations Direct Mortgage LLC (Irvine, Calif.): Nations Direct is a Non-Supervised Direct Endorsement mortgagee headquartered in Irvine, Calif. HUD alleged that Nations Direct used the official HUD seal in a contract posted to its Web site. The Board voted to impose a Civil Money Penalty in the amount of $3,500, which Nations Direct has now offered to pay.
► VanDyk Mortgage Corporation (Grand Rapids, Mich.): VanDyk Mortgage Corporation is a Non-Supervised Direct Endorsement mortgagee headquartered in Grand Rapids, MI. HUD alleged that VanDyk violated HUD/FHA requirements by failing to properly document a borrower’s income and failing to ensure that an employee did not participate in the origination of her own insured mortgage. VanDyk agreed to pay a Civil Money Penalty of $7,500 and indemnify the Department against losses in the two loans at issue.
► U.S. Bank NA (Minneapolis, Minn.): U.S. Bank is a Supervised Federal Savings Bank headquartered in Minneapolis, Minn., and is a GNMA issuer. US Bank has agreed to settle allegations that it violated HUD/FHA requirements in the submission of documentation necessary for the Department to process a claim on a multifamily insured property. HUD had alleged that US Bank’s failure to provide necessary documentation delayed the re-sale of the foreclosed property and the Department’s mitigation of the FHA fund’s losses in connection with the claim. US Bank agreed to make an administrative payment of $37,500 to resolve this matter.
► Sun West Mortgage Company Inc. (Cerritos, Calif.): Sun West Mortgage Company Inc. is a Non-Supervised Loan Correspondent headquartered in Cerritos, CA. HUD alleged that Sun West originated ten HECM loans in Massachusetts before receiving the necessary license and approval to originate HECM loans in that state and that Sun West failed to notify HUD that Massachusetts had issued a Cease and Desist order prohibiting it from the unlicensed origination of loans in that jurisdiction. Sun West agreed to pay a Civil Money Penalty of $10,000 and accept a Letter of Reprimand to resolve the matter.
The MRB also issued a letter of reprimand issued to Community Lender Inc. of Boise, Idaho. HUD alleged Community Lender failed to notify HUD that it had lost its license in the State of Idaho. A letter of reprimand was deemed appropriate because the revocation of Community’s license occurred as a result of the lapsing of its Surety Bond for a period of two weeks and the lender provided evidence that the problem was immediately corrected.
For more information, visit www.hud.gov.

Compliance, Originations, Residential, Marketing