Mortgagee Review Board; administrative actions,

[Federal Register: March 1, 2004 (Volume 69, Number 40)]

[Notices]

[Page 9633-9638]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr01mr04-89]

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-4914-N-02]

Mortgagee Review Board; Administrative Actions

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing Commissioner, HUD.

ACTION: Notice.

SUMMARY: In compliance with section 202(c) of the National Housing Act, this notice advises of the cause and description of administrative actions taken by HUD's Mortgagee Review Board against HUD-approved mortgagees.

FOR FURTHER INFORMATION CONTACT: D. Jackson Kinkaid, Secretary to the Mortgagee Review Board, 451 Seventh Street, SW., Washington, DC 20410- 8000, telephone: (202) 708-3041 extension 3574 (this is not a toll-free number). Hearing- or speech-impaired individuals may access this telephone number through TTY by calling the toll-free Federal Information Relay Information Service at 1-800-877-8339.

SUPPLEMENTARY INFORMATION: Section 202(c)(5) of the National Housing Act (12 U.S.C. 1708(c)(5) requires that HUD publish a description of and the cause for administrative action against a HUD-approved mortgagee by HUD's Mortgagee Review Board. In compliance with the requirements of section 202(c)(5), this notice advises of administrative actions that have been taken by the Mortgagee Review Board (Board) from December 2001 through September 2003.

1. Acclaim Mortgage Incorporated, Denver, CO [Docket No. 02-1959-MR]

   Action: Settlement Agreement signed on May 29, 2003. Without admitting fault or liability, Acclaim Mortgage Incorporated (AMI) agreed to pay a civil money penalty in the amount of $44,900.

   Cause: The Board took this action based on the following violations of the HUD's Federal Housing Administration (FHA) requirements in the origination of HUD/FHA-insured loans where AMI: failed to perform Quality Control reviews in compliance with HUD/FHA requirements; failed to file annual reports regarding loan application activity as required by HUD/FHA requirements; and failed to pay all of its own operating expenses in compliance with HUD/FHA requirements.

2. Allied Home Mortgage Capital Corporation, Houston, TX [Docket No. 01-1465-MR]

   Action: Settlement Agreement signed on August 13, 2003. Without admitting fault or liability, Allied Home Mortgage Capital Corporation (AMCC) agreed to pay an administrative payment in the amount of $50,000.

   Cause: The Board took this action based on the following violations of the HUD/FHA requirements in the origination of HUD/FHA-insured loans where AMCC: engaged in improper branch operations because the employment agreements violated HUD/FHA requirements; allowed a loan officer to originate a HUD/FHA-insured loan in which the person was both the loan officer and real estate agent; and allowed the origination of HUD/FHA loans to occur in an office space that was not clearly identified as an office of AHMCC.

3. Atlantic Coast Mortgage Services, Pleasantville, NJ [Docket No. 02- 1913-MR]

   Action: Settlement Agreement signed on March 21, 2003. Without admitting fault or liability, Atlantic Coast Mortgage Services (ACMS) agreed to pay a civil money penalty in the amount of $100,000, and indemnify HUD on 13 FHA-insured loans.

   Cause: The Board took this action based on the following violation of HUD/FHA requirements in the origination of HUD/FHA insured loans where ACMS failed to obtain and properly analyze necessary documents to determine the financial capacity of a nonprofit borrower.

4. BancFirst Corporation, Oklahoma City, OK [Docket No. 02-2152-MR]

   Action: Settlement Agreement signed on March 24, 2003. Without admitting fault or liability, BancFirst Corporation (BFC) agreed to pay an administrative payment in the amount of $9,000.

   Cause: The Board took this action based as a result of BFC's failure to perform property inspections on HUD/FHA-insured multifamily projects.

5. Bank of New York, New York, NY [Docket No. 02-1963-MR]

   Action: Settlement Agreement signed on January 31, 2003. Without admitting fault or liability, Bank of New York (BNY) agreed to pay an administrative payment in the amount of $36,000.

   Cause: The Board took this action as a result of BNY's failure to perform property inspections on HUD/FHA-insured multifamily projects.

6. District of Columbia Housing Finance Agency, Washington, DC [Docket No. 03-3025-MR]

   Action: Settlement Agreement signed on May 13, 2003. Without admitting fault or liability, District of Columbia Housing Finance Agency (DCHFA) agreed to pay an administrative payment in the amount of $3,000.

   Cause: The Board took this action as a result of DCHFA's failure to perform a property inspection on one HUD/FHA-insured multifamily project.

7. Empire Funding Corporation, Austin, TX [Docket No. 99-974-MR]

   Action: Settlement Agreement signed on August 7, 2002. Without admitting fault or liability, Empire Funding Corporation (EFC) agreed to forever forfeit its HUD/FHA Title I approval and liquidate its assets in accordance with a federal bankruptcy court approved liquidation plan. HUD agreed not to pursue civil money penalties.

   Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of FHA-insured Title I property improvement loans where EFC: Failed to re-approve dealers in a timely manner and funded Title I loans from non-approved dealers; and failed to ensure that detailed descriptions of the

   [[Page 9634]]

   proposed improvements were provided to the borrowers.

8. Evans Mortgage Corporation, Edmond, OK [Docket No. 01-1565-MR]

   Action: Settlement Agreement signed on June 11, 2002. Without admitting fault or liability, Evans Mortgage Corporation (EMC) agreed to pay a civil money penalty in the amount of $10,000 and refund excessive fees charged to mortgagors.

   Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA insured loans where EMC: Failed to file annual reports regarding loan application activity as required by HUD/FHA requirements; failed to maintain and implement a Quality Control Plan in compliance with HUD requirements; allowed non-FHA approved entities to originate loans that were registered with HUD as though they had been originated by EMC employees; paid referral fees to non-employees; signed false lender certifications contained in the addenda to the Uniform Residential Loan Application; and charged unallowable and/or excessive fees to FHA borrowers not specifically permitted by HUD/FHA.

9. Federal National Mortgage Association, Washington, DC [Docket No. 03-3026-MR]

   Action: Settlement Agreement signed on May 8, 2003. Without admitting fault or liability, Federal National Mortgage Association (FNMA) agreed to pay an administrative payment in the amount of $6,000.

   Cause: The Board took this action as a result of FNMA's failure to perform property inspections on HUD/FHA-insured multifamily projects.

10. Fidelity Bank and Trust Company, Baton Rouge, LA [Docket No. 01- 1580-MR]

    Action: On June 25, 2002, the Board issued a letter to Fidelity Bank and Trust Company (FBTC) withdrawing its HUD/FHA-approval and imposing a civil money penalty in the amount of $93,500.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA insured loans where FBTC: Failed to adopt, maintain and implement a quality control plan in compliance with HUD requirements; failed to adequately verify the source and sufficiency of funds used for the down payment, loan closing, or to satisfy loan approval conditions; failed to properly verify and/or calculate the mortgagor's income used for qualifying purposes; failed to include all of the borrower's debts when calculating the total fixed payment-to-income qualifying ratios; failed to ensure that a mortgagor met a minimum required investment because the loan exceeded the maximum mortgage amount; failed to resolve discrepancies in documentation used to process, underwrite and approve HUD/FHA loans; failed to satisfy requirements established by the Direct Endorsement underwriter prior to closing; failed to verify the borrower's stability of income or employment for the recent two full years; approved borrowers with delinquent and/or poor credit histories; and charged fees to HUD/FHA borrowers that were not specifically permitted by HUD/FHA.

11. Financial Mortgage Corporation, Fort Washington, PA [Docket No. 00- 1106-MR]

    Action: Settlement Agreement signed on April 17, 2002. Without admitting fault or liability, Financial Mortgage Corporation (FMC) agreed to pay a civil money penalty in the amount of $1,000 and indemnify HUD for one loan.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA-insured loans where FMC: Used falsified or conflicting documentation to approve a HUD/FHA mortgagor, and failed to properly verify income to approve a HUD/FHA mortgagor.

12. First Colony Mortgage Corporation, Orem, UT [Docket No. 01-1566-MR]

    Action: Settlement Agreement signed on March 14, 2003. Without admitting fault or liability, First Colony Mortgage Corporation (FCMC) agreed to pay a civil money penalty in the amount of $49,500, indemnify HUD on two FHA-insured loans, and buydown the over-insured amount in one loan.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA insured loans where FCMC: Accepted loans originated by personnel not employed or not exclusively employed by FCMC; failed to properly verify the source and adequacy of funds for the down payment and/or closing costs; failed to properly verify and analyze income; failed to ensure property eligibility for HUD/FHA mortgage insurance; and closed a loan in excess of the maximum allowable insurance amount resulting in an over-insured loan.

13. First Eastern Mortgage Corporation, Andover, MA [Docket No. 02- 1905-MR]

    Action: Settlement Agreement signed on April 1, 2003. Without admitting fault or liability, First Eastern Mortgage Corporation (FEMC) agreed to pay an administrative payment in the amount of $171,000, and indemnify HUD on 49 HUD/FHA-insured loans.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA insured loans where FEMC: Failed to obtain and properly analyze necessary documents to determine the financial capacity of a non-profit borrower; charged borrowers fees not permitted by HUD/FHA; and failed to identify the lender credits on the Good Faith Estimate and the HUD-1 Settlement Statement.

14. First Nationwide Mortgage Corporation, Frederick, MD [Docket No. 02-2149-MR]

    Action: Settlement Agreement signed on May 1, 2003. Without admitting fault or liability, First Nationwide Mortgage Corporation (FNMC) agreed to pay an administrative payment in the amount of $12,000.

    Cause: The Board took this action as a result of FNMC's failure to perform property inspections on HUD/FHA-insured multifamily projects.

15. Firstrust Savings Bank, Philadelphia, PA [Docket No. 03-3086-MR]

    Action: Settlement Agreement signed on June 30, 2003. Without admitting fault or liability, Firstrust Savings Bank (FSB) agreed to pay an administrative payment in the amount of $6,000.

    Cause: The Board took this action as a result of FSB's failure to perform property inspections on HUD/FHA-insured multifamily projects.

16. Flagstar Bank, F.S.B., Troy, MI [Docket No. 02-1948-MR]

    Action: On March 7, 2003 the Board issued a letter of reprimand to Flagstar Bank, F.S.B.

    Cause: The Board took this action after a jury found that Flagstar Bank had violated sections 805 and 818 of the Fair Housing Act (42 U.S.C. 3605 and 3617), and corresponding regulations promulgated by HUD pertaining to mortgage lending, 24 CFR 100.120 to 100.130.

17. GMAC Mortgage Corporation, Horsham, PA [Docket No. 01-1596-MR]

    Action: Settlement Agreement signed on April 28, 2003. Without admitting fault or liability, GMAC Mortgage Corporation (GMACMC) agreed to pay

    [[Page 9635]]

    an administrative payment in the amount of $91,000 and indemnify HUD on 26 HUD/FHA-insured loans.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA insured loans where GMACMC: Failed to identify and/or resolve false or conflicting documentation prior to approving HUD/FHA mortgagors; failed to ensure that the mortgagor made the minimum required investment in the property; failed to adequately verify the source of funds for mortgagor's down payment and/or closing costs; failed to ensure that verifications and other supporting documents did not pass through the hands of an interested third party; failed to obtain and analyze the terms and conditions of the real estate transaction and to consider the acquisition cost of recently acquired properties in the underwriting of the loans; failed to submit closed loans form endorsement within 60 days after loan closing as required; permitted an employee, who was also a party to the transaction, to be involved in the loan processing; failed to retain pertinent loan file documents; permitted cash back to a mortgagor receiving a homebuyer's assistance grant; and failed to properly evaluate effective income.

18. Highland Mortgage Company, Birmingham, AL [Docket No. 03-3089-MR]

    Action: Settlement Agreement signed on June 30, 2003. Without admitting fault or liability, Highland Mortgage Company (HMC) agreed to pay an administrative payment in the amount of $12,000.

    Cause: The Board took this action as a result of HMC's failure to perform property inspections on HUD/FHA-insured multifamily projects.

19. Imperial Lenders Corporation, Miami, FL [Docket No. 01-1623-MR]

    Action: Settlement Agreement signed on June 24, 2003. Without admitting fault or liability, Imperial Lenders Corporation (ILC) agreed to pay a civil money penalty in the amount of $18,000.

    Cause: The Board took this action based on the following violations of the HUD/FHA requirements where ILC: Failed to prevent individuals who were not on the employee list to participate in the origination of HUD/FHA insured loans by interviewing applicants; failed to establish, maintain and implement a Quality Control Plan in compliance with HUD/ FHA requirements; failed to file annual reports regarding FHA loan application activity for the years 1998 and 1999; failed to prevent a senior corporate officer to actively work as a real estate broker; and failed to separate its office space from another entity and clearly identify itself to the public.

20. Infinity Mortgage Company, Murray, UT [Docket No. 01-1574-MR]

    Action: Settlement Agreement signed on May 6, 2002. Without admitting fault or liability, Infinity Mortgage Company (IMC) agreed to pay a civil money penalty in the amount of $6,500.

    Cause: The Board took this action based on the following violations of the HUD/FHA requirements in the origination of HUD/FHA insured loans where IMC: Failed to establish a proper loan correspondent/sponsor relationship with a lender; failed to maintain and implement a quality control plan; and, failed to file annual reports regarding FHA loan application activity.

21. Investors Mortgage Funding Incorporated, Sacramento, CA [Docket No. 01-1486-MR]

    Action: Settlement Agreement signed on April 17, 2002. Without admitting fault or liability Investors Mortgage Funding Incorporated (IMFI) agreed to a voluntary withdrawal of its HUD/FHA lender approval and pay a civil money penalty in the amount of $40,000.

    Cause: The Board took this action based on the following violations of the HUD/FHA requirements in the origination of HUD/FHA insured loans where IMFI: Failed to implement and maintain a quality control plan in compliance with HUD requirements; failed to file annual reports regarding loan application activity as required by HUD/FHA requirements; permitted non-FHA approved branch offices to originate and process HUD/FHA-insured loans; employed loan officers that were not exclusive employees; and used non-employees to originate and process HUD/FHA mortgage loans.

22. KB Home Mortgage Company, f/k/a Kaufman and Broad Mortgage Company, Woodland Hills, CA [Docket No. 01-1594-MR]

    Action: Settlement Agreement signed on January 30, 2003. Without admitting fault or liability, KB Home Mortgage Company (KBMC) (fka Kaufman and Broad Mortgage Company) agreed to pay an administrative payment in the amount of $146,000, indemnify HUD on 15 HUD/FHA-insured loans, and pay HUD for losses associated with HUD/FHA insurance claims.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA-insured loans where KBMC: Accepted fees for real estate settlement services when either no or nominal services were provided; failed to properly verify the source and adequacy of funds used for the down payment and/or closing costs; failed to properly verify, analyze, and calculate income used to qualify mortgagors; failed to properly consider and verify liabilities of the mortgagor and/or non-purchasing spouse; failed to properly document mortgagor's credit histories; failed to properly document that judgments were paid-off or that the creditor was willing to subordinate the judgments to the insured mortgages; failed to update expired credit documents; and failed to provide compensating factors for ratios exceeding HUD/FHA standards.

23. Kiddco Mortgage Company, Cincinnati, OH [Docket No. 01-1578-MR]

    Action: On February 28, 2003, the Board issued a letter to Kiddco Mortgage Company (KMC) withdrawing its HUD/FHA approval and imposing a civil money penalty in the amount of $167,875.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA insured loans where KMC: Falsified documentation or conflicting information to originate and obtain mortgage insurance; failed to document the borrower's source of funds used for downpayment or closing costs; used faxed copies of documents to originate loans; failed to perform satisfactory credit analysis; failed to ensure that mortgagors met their minimum required investment; failed to ensure that the requirements for high loan-to-value, new construction loans were met; failed to remit Up-Front Mortgage Insurance Premiums to HUD within 15 days from the date of the loan closing; failed to file annual reports regarding FHA loan application activity as required by HUD/FHA for 1995 through 2000; failed to ensure that an employee did not act as both Loan Officer and Direct Endorsement Underwriter on HUD/FHA loans; accepted loan applications from non-employees; failed to ensure that their employees worked exclusively for the lender and did not maintain other employment in the mortgage or real estate industry; failed to ensure that loans involving employees of KMC were properly processed; failed to ensure that loan verification documents did not pass through the hands of an interested third party; failed to provide evidence that all parties to the loan transactions

    [[Page 9636]]

    were checked against HUD's Limited Denial of Participation (LDP) listing and the government-wide Government Services Administration (GSA) Excluded Parties Listing System; failed to maintain fidelity bond coverage and errors and omissions insurance; paid fees on behalf of borrowers which ere not permitted by HUD/FHA; and failed to maintain and implement a quality control plan in compliance with HUD/FHA requirement.

24. Lend-Mor Capital Corporation, Garden City, NY [Docket No. 01-1361- MR]

    Action: Settlement Agreement signed on July 17, 2002. Without admitting fault or liability, Lend-Mor Capital Corporation (LMCC) agreed to pay a civil money penalty in the amount of $28,500 and indemnify HUD on eight HUD/FHA-insured loans.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA-insured loans where LMCC: Failed to maintain and implement a Quality Control Plan in compliance with HUD requirements; failed to verify documentation used to qualify borrowers in compliance with HUD requirements; failed to determine whether the borrower met minimum cash investment requirements; failed to verify the source and adequacy of funds for the downpayment and/or closing costs; did not provide adequate significant compensating factors to justify the approval of the mortgage loan with ratios exceeding FHA guidelines; and failed to explain irregularities in the appraisal report.

25. Loan Correspondents Incorporated, d/b/a Capital Funding Group, Costa Mesa, CA [Docket No. 00-1349-MR]

    Action: Settlement Agreement signed on November 6, 2002. Without admitting fault or liability, Loan Correspondents Incorporated (LCI), d/b/a Capital Funding Group, agreed to pay a civil money penalty in the amount of $24,000.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA insured loans where LCI: failed to maintain and implement a Quality Control Plan in accordance with HUD requirements; failed to file annual reports regarding loan application activity in accordance with HUD requirements; used falsified documentation and/or conflicting information in originating HUD/FHA-insured loans; failed to adequately document the source of funds used for the down payment and closing costs; and failed to identify sales within 12 months on appraisals.

26. M & T Mortgage Corporation, Buffalo, NY [Docket No. 01-1602-MR]

    Action: Settlement Agreement signed on July 17, 2002. Without admitting fault or liability, M & T Mortgage Corporation (MTMC) agreed to pay an administrative payment in the amount of $118,000.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA insured loans where MTMC: Failed to obtain the required exhibits and/or execute documents prior to disbursing funds from the 203(k) rehabilitation escrow account; disbursed contingency funds to borrowers without the required repair inspection; failed to take appropriate action when the rehabilitation period expired and the borrowers failed to complete the rehabilitation within the required time frame; and failed to arrange for a final inspection on each of the loans that were being placed in foreclosure.

27. Mortgage Amenities Corporation, Lincoln, RI [Docket No. 02-1906-MR]

    Action: Settlement Agreement signed on July 24, 2003. Without admitting fault or liability, Mortgage Amenities Corporation (MAC) agreed to pay an administrative payment in the amount of $175,000, and indemnify HUD on 56 FHA-insured loans.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA insured loans where MAC: Failed to obtain and properly analyze the documents necessary to determine the financial capacity of a non-profit borrower; charged borrowers fees not permitted by HUD/FHA; failed to identify the lender credits on the Good Faith Estimate and HUD-1 Settlement Statement; and failed to implement and maintain a Quality Control Plan in compliance with HUD/FHA requirements.

28. Mortgage Factory Incorporated, Houston, TX [Docket No. 02-1956-MR]

    Action: Settlement Agreement signed on April 4, 2003. Without admitting fault or liability, Mortgage Factory Incorporated (MFI) agreed to pay a civil money penalty in the amount of $200,000.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA-insured loans where MFI: Used prohibited third party originators to originate HUD/ FHA-insured loans; failed to file annual reports regarding FHA loan application activity; and failed to display or maintain a fair housing poster at the main office or at a branch office.

29. Mortgage Partners Incorporated, San Diego, CA [Docket No. 01-1531- MR]

    Action: Settlement Agreement signed on April 1, 2003. Without admitting fault or liability, Mortgage Partners Incorporated (MPI) agreed to pay a civil money penalty in the amount of $44,500.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA insured loans where MPI: Failed to maintain and implement a Quality Control Plan in compliance with HUD requirements; failed to file annual reports regarding FHA loan application activity as required by HUD requirements; allowed prohibited branch arrangements; and allowed dual employment of two loan officers.

30. New York Housing Finance Agency, New York, NY [Docket No. 03-3011- MR]

    Action: Settlement Agreement signed on March 3, 2003. Without admitting fault or liability, New York Housing Finance Agency (NYHFA) agreed to pay an administrative payment in the amount of $57,000.

    Cause: The Board took this action as a result of NYHFA's failure to perform property inspections on HUD/FHA-insured multifamily projects.

31. North Carolina Housing Finance Agency, Raleigh, NC [Docket No. 03- 3109-MR]

    Action: Settlement Agreement signed on June 30, 2003. Without admitting fault or liability, North Carolina Housing Finance Agency (NCHFA) agreed to pay an administrative payment in the amount of $3,000.

    Cause: The Board took this action as a result of NCHFA's failure to perform a property inspection on one HUD/FHA-insured multifamily project.

32. Omega Financial Services Incorporated, Whittier, CA [Docket No. 01- 1490-MR]

    Action: On December 5, 2001 the Board issued Omega Financial Services Incorporated (OFSI) a letter withdrawing its FHA approval. On April 17, 2002 the Department entered into a Settlement Agreement with OFSI in which, without admitting fault or liability, they agreed to pay a civil

    [[Page 9637]]

    money penalty in the amount of $30,000.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA insured loans where OFSI: failed to maintain and implement a quality control plan in compliance with HUD requirements; used falsified documentation and/or conflicting information in originating nine loans; negotiated employment agreements which did not conform to HUD requirements; and failed to notify HUD of its change of address and change of officers.

33. PFC Corporation, McLean, VA [Docket No. 03-3018-MR]

    Action: Settlement Agreement signed on June 30, 2003. Without admitting fault or liability, PFC Corporation (PFCC) agreed to pay an administrative payment in the amount of $30,000.

    Cause: The Board took this action as a result of PFCC's failure to perform property inspections on HUD/FHA-insured multifamily projects.

34. Priority Mortgage Incorporated, Las Vegas, NV [Docket No. 00-1338- MR]

    Action: On March 19, 2002, the Board sent a letter to Priority Mortgage Incorporated (PMI) withdrawing its HUD/FHA approval for a period of five years.

    Cause: The Board took this action based on the following violations of the HUD/FHA requirements in the origination of HUD/FHA-insured loans where PMI: failed to maintain and implement a quality control plan in compliance with HUD requirements; failed to file annual reports regarding FHA loan application activity as required by HUD's requirements; failed to have mortgagors certify their statements explaining derogatory credit; failed to ensure that mortgagors did not sign blank documents; and failed to obtain gift letters in compliance with HUD's requirements.

35. Rhode Island Housing Mortgage Finance Corporation, Providence, RI

    [Docket No. 02-2154-MR]

    Action: Settlement Agreement signed on April 3, 2003. Without admitting fault or liability, Rhode Island Housing Mortgage Finance Corporation (RIHMFC) agreed to pay an administrative payment in the amount of $30,000.

    Cause: The Board took this action as a result of RIHMFC's failure to perform property inspections on HUD/FHA-insured multifamily projects.

36. Sterling Capital Mortgage Company, Houston, TX [Docket No. 02-1910- MR]

    Action: Settlement Agreement signed on September 29, 2003. Without admitting fault or liability, Sterling Capital Mortgage Company (SCMC) agreed to indemnify HUD on 44 HUD/FHA-insured loans and pay HUD an administrative payment in the amount of $25,000.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA-insured loans where SCMC: used falsified documentation and/or conflicting information in originating loans and obtained HUD/FHA mortgage insurance; allowed loans to be originated by personnel not employed or not exclusively employed by SCMC; violated HUD regulations governing conflict of interest; failed to adequately verify the amount and/or stability of effective income; failed to adequately verify the source and/or adequacy of funds used to close loan transactions; omitted and/or understated mortgagor liabilities in loan qualifications; failed to adequately confirm the identity of mortgagors and obtain credit reports for all name variances; failed to reconcile deficiencies in appraisal reports; closed loans in excess of the maximum allowable mortgage amount resulting in over-insured mortgages; failed to reconcile important file discrepancies; charged mortgagors prohibited fees; and failed to verify mortgagors' Social Security numbers.

37. Summit Mortgage Corporation, Houston, TX [Docket No. 01-1524-MR]

    Action: Settlement Agreement signed on March 5, 2003. Without admitting fault or liability, Summit Mortgage Company (SMC) agreed to pay a civil money penalty in the amount of $88,000, and indemnify HUD on 28 FHA-insured loans for five years.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA-insured loans including where SMC: failed to verify the source of funds used for closing costs, earnest money deposits and/or pay off debts; used inaccurate or unstable income to qualify the mortgagors; used inaccurate or unstable income to qualify the mortgagors; failed to adequately document the mortgagor's income; omitted mortgagor liabilities and/or the liabilities of the non-purchasing spouse in loan qualifications; approved loans for ineligible borrowers; approved loans in excess of benchmark ratios without adequate compensating factors; failed to properly document factors to justify the approval of a mortgagor with unacceptable credit history; failed to clarify or document important file discrepancies; closed loans in excess of the maximum allowable amount resulting in over-insured mortgages; failed to document that dwellings insured under section 221(d)(2) conformed to the standards of local housing codes; and failed to comply with escrow procedures for deferred repairs.

38. Sun American Mortgage Company, Mesa, AZ [Docket No. 00-1328-MR]

    Action: Settlement Agreement signed on September 6, 2002. Without admitting fault or liability, Sun American Mortgage Company (SAMC) agreed to pay an administrative payment to the Department in the amount of $50,000 and indemnify nineteen FHA-insured mortgages.

    Cause: The Board took this action based on the following violations of HUD/FHA requirements in the origination of HUD/FHA insured loans where SAMC: permitted interested third parties to conduct the face to face interview; failed to identify and resolve conflicting or inaccurate information obtained in connection with mortgagor's applications; failed to follow HUD/FHA requirements and prudent lending practices by permitting a loan officer to originate loans involving a real estate firm owned by members of the loan officer's family; knowingly submitted loans to HUD/FHA for insurance containing false information; closed loans on properties owned by HUD in which the lender charged the Department financing and/or closing costs that exceeded reasonable and customary costs in the areas in which the properties were located; and failed to properly implement a quality control program in compliance with HUD/FHA requirements.

39. Swan Investments International Incorporated, d/b/a International Mortgage Corporation, Covina, CA [Docket No. 01-1542-MR]

    Action: Settlement Agreement signed on June 18, 2002. Without admitting fault or liability, Swan Investments International Incorporated (SIII) agreed to pay a civil money penalty in the amount of $40,000 and indemnify HUD on one HUD/FHA-insured mortgage.

    Cause: The Board took this action based on the following violations of the HUD/FHA requirements in the origination of HUD/FHA insured loans where SIII: Failed to maintain and implement a quality control plan in

    [[Page 9638]]

    compliance with HUD requirements; failed to file annual reports regarding FHA loan application activity as required by HUD's requirements; executed a Real Estate Broker Agreement with its loan officers that is not in compliance with HUD requirements; allowed non- employees to originate HUD/FHA mortgage loans; and failed to ensure that its employees work exclusively for SIII.

40. Western Fidelity Mortgage Company, Salt Lake City, UT [Docket No. 01-1585-MR]

    Action: Settlement Agreement signed on January 27, 2003. Without admitting fault or liability, Western Fidelity Mortgage Company (WFMC) agreed to pay a civil money penalty in the amount of $100,000, indemnify HUD on 28t FHA-insured mortgages.

    Cause: The Board took this action based on the following violations of the HUD/FHA requirements in the origination of HUD/FHA insured loans where WFMC: Failed to establish an FHA approved loan correspondent/ sponsor relationship; failed to properly verify the source and/or adequacy of funds for the down payment and/or closing costs; failed to properly verify and analyze income; failed to ensure property eligibility for HUD/FHA mortgage insurance; and failed to ensure creditworthiness and the use of acceptable qualifying ratios.

    Dated: February 20, 2004. John C. Weicher, Assistant Secretary for Housing-Federal Housing Commissioner, Chairman, Mortgagee Review Board.

    [FR Doc. 04-4418 Filed 2-27-04; 8:45 am]

    BILLING CODE 4210-27-P