For violations of the Federal Housing Administration’s (FHA) program requirements, the MRB can withdraw a lender’s FHA approval, impose civil monetary penalties, enter into settlement agreements to bring them into compliance, place lenders on probation, and issue letters of reprimand.
American Free Home Mortgage (AFHM) of Prosper, Texas was charged with 11 violations, fined $169,419 and had to permanently withdraw its FHA approval. Specifically, AFHM “artificially increased mortgage costs by an average of $12,000 per loan through illegitimate fees paid to a company owned and operated by its sales manager.” The company did not admit to fault or liability.
In the other case, R. H. Lending, Inc. (RHL) of Colleyville, TX was accused of multiple underwriting violations regarding manufactured home loans. The MRB alleged RHL “took part in a scheme to disguise fees charged to borrowers as legitimate construction fees, but for which no work was performed, thus creating an inflated mortgage for the borrowers and increasing FHA’s exposure to loss.”
RHL also did not admit fault or liability, MHProNews understands, but agreed to pay $300,000 in civil penalties and to permanently withdraw its FHA approval. The government also barred two RHL employees from doing business with the federal government for seven years.
“FHA-approved lenders are obliged to apply our underwriting standards, not only to protect our insurance fund, but to make certain families can sustain their mortgages,” said Helen Kanovsky, HUD’s general counsel. ##
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