Less then a day after the Federal Housing Administration (FHA) withdrew FHA approval of Ideal Mortgage Bankers, doing business as Lend America and Lending Key (Ideal), Lend America has announced via its Web site that it has ceased its loan origination and operations.
In addition to the action taken by the FHA against Lend America, the Government National Mortgage Association (Ginnie Mae) yesterday defaulted the company. Reports say the company is currently in the process of laying off a majority of its 600-member workforce.
Reports also claimed that employees of Lend America were locked out of the company’s 60,000-sq. ft. Meliville, N.Y. headquarters and not allowed in until 11:00 a.m. EST, presumably as management met to plot the company’s next move.
“The company [Lend America] is surprised and disappointed by the action by the U.S. Department of Housing & Urban Development’s Mortgagee Review Board [MRB],” read a statement released by Lend America Tuesday morning. “The company is currently reviewing all possible options and remedies in response to this action, and will respond shortly once a decision has been reached.”
The FHA also imposed civil monetary penalties in the amount of $512,500. HUD’s MRB took the action based upon two notices of violation issued to the company in the past month. The MRB cited numerous violations of FHA origination and underwriting requirements, including failing to document borrowers’ income and creditworthiness, and for submitting false certifications to HUD.
“We have no tolerance for lenders who abuse their FHA-approval,” said FHA Commissioner David Stevens. “The evidence in this case points to a disturbing pattern of senior officials and underwriters, either not knowing what they were doing, or not caring. Therefore, Ideal has been immediately withdrawn from participating in the FHA-insured mortgage program.”
At HUD's request, the U.S. Attorney's Office for the Eastern District of New York is also pursuing a civil fraud injunction against the company and one of its senior managers, Michael Ashley. The action follows a quality assurance review that found the company violated the following HUD/FHA requirements by:
►Using conflicting information in originating and obtaining HUD/FHA mortgage insurance;
►Submitting false certifications that an employee of the lender obtained directly from the borrower the information contained in the application;
►Approving loans that did not meet the minimum credit requirements;
►Failing to adequately document the stability and/or source of income used to qualify mortgage loans;
►Failing to adequately document the source of funds used to close the loan or satisfy various omitted liabilities;
►Omitting liabilities from the underwriting analysis without supporting documentation;
►Approving loans with ratios that exceeded HUD standards without significant compensating factors;
►Exceeding HUD requirements when calculating the maximum insurable mortgage;
►Failing to process a loan in accordance with HUD policy on employee loans;
►Closing a loan with an excessive mortgage broker fee paid to an approved FHA loan correspondent;
►Failing to provide the required documentation to support IMB's decision to approve the mortgage loan; and
►Submitting false certifications to HUD in connection with the submission of its Yearly Verification Report.
According to the Lend America Web site, the company will continue to operate to fulfill its obligations to past and current borrowers, FNMA, GNMA and the regulatory agencies. For more information, visit www.lendamerica.com.