240 Lenders Under the Gun for Failure to Meet FHA Requirements

240 Lenders Under the Gun for Failure to Meet FHA Requirements

July 29, 2011

The Federal Housing Administration’s Mortgagee Review Board (MRB) has announced hundreds of administrative actions against FHA-approved lenders who failed to meet its requirements. MRB sanctions against lenders include reprimands, probations, suspensions, withdrawals of approval, and civil monetary penalties. Charges against these companies run the gamut of FHA violations from failure to maintain and implement quality control (QC) plans, to failure to implement and follow HUD/FHA’s Home Equity Conversion Mortgage (HECM) program requirements, to charging borrowers excessive and duplicative fees.
“It’s never been more important that lenders doing business with FHA apply our standards to each and every loan they originate and underwrite,” said Acting FHA Commissioner Carol Galante. “FHA requirements ensure homeowners are put on a path of sustainable homeownership and that ultimately helps stabilize entire neighborhoods and communities.”
Click here to read the full list of violators and their respective violations in the Federal Register/Volume 76, Number 146.
Since 2009, the MRB took more than 2,300 administrative actions against lenders, including a record 1,600 in 2010. Meanwhile, FHA instituted a number of new rules designed to strengthen risk management including increasing net worth requirements of FHA-approved lenders, strengthening lender approval criteria, and making lenders liable for the oversight of mortgage brokers.
FHA’s Mortgagee Review Board sanctions FHA-approved lenders for violations of the agency’s program requirements. For serious violations, the Board can withdraw a lender's FHA approval so that the lender cannot participate in FHA programs. In less serious cases, the Board enters into settlement agreements with lenders to bring them into compliance. The Board can also impose civil money penalties, probation, suspension, and issue letters of reprimand. The MRB publishes these actions after all appeals are exhausted and final determinations can be announced publicly. 

Compliance, Originations, Residential