The Federal Housing Administration (FHA) has announced that it is permanently withdrawing its approval of Atlanta-based RSA Financial Inc. and 1st Alliance Mortgage LLC of Houston, Texas. The actions announced prevent these lenders from originating and underwriting new FHA-insured mortgages or from participating in the FHA single-family insurance program. The U.S. Department of Housing & Urban Development's (HUD) Mortgagee Review Board (MRB) also voted to impose a $15,000 civil penalty against RSA and seek $267,900 from 1st Alliance.
HUD's MRB cited RSA for misleading HUD that it was properly licensed by the Georgia Department of Banking and Finance at the time the company submitted an application to FHA for lender approval. In addition, the MRB alleges that RSA submitted false and/or misleading information regarding the criminal conviction and sanction history of its owner and executive, Ramsey Suphi Agan. HUD claims 1st Alliance engaged in prohibited branch arrangements, provided false certifications, failed to implement a quality control plan, and a number of other violations of HUD/FHA standards.
"If lenders want to do business with the FHA, it's critical that they provide complete and truthful information so that we can properly determine who we're dealing with," said FHA Commissioner David H. Stevens. "If any lender can't operate within FHA's guidelines, they can't do business with us."
The permanent withdrawal of RSA Financial's FHA approval is based upon violations set forth in a Notice of Violation dated Dec. 4, 2009. RSA's application to FHA contained false and/or materially misleading information in connection with RSA's failure to obtain proper licensing in the State of Georgia and in connection with Agan's history of criminal convictions and administrative sanctions. Specifically, RSA represented that company officials "are neither currently, nor have ever been, debarred, sanctioned, fined, convicted, denied approval, or refused a license by any State, Federal, or local government agency." Agan has been suspended and debarred by HUD on at least two occasions and has two felony convictions.
In 1982, Agan pleaded guilty to two counts of knowingly submitting false statements for the purposes of influencing the actions of a federally insured bank. He was sentenced to two years in prison (suspended), two years of probation, and fined $10,000. These actions led to the permanent withdrawal of his former FHA-approved company, Adana Mortgage Bankers, and a five-year debarment of Agan. In 1988, Agan was convicted of multiple counts of bribery by a Georgia Court, causing HUD to debar Agan indefinitely. RSA has 30 days to challenge the withdrawal action before an administrative law judge.
The permanent withdrawal of 1st Alliance's FHA approval is based on violations set forth in a Notice of Violation dated Oct. 21, 2009. The MRB alleges that 1st Alliance used independent contractors to originate 708 loans from branch offices that were not true branches of the company and then falsely certified these contractors were full-time employees of the company. The MRB also contends 1st Alliance failed to adopt and maintain a required quality control plan; failed to report employee compensation on IRS Form W-2; charged consumers unallowable, excessive or duplicative loan processing and origination fees; and failed to properly ensure that fees "paid outside of closing" were listed on borrowers HUD-1 Settlement Statements.
For more information, visit www.hud.gov.