New York based Federal Housing Administration (FHA) lender, Lend America was shut down by the Feds this past week for apparent fraudulent mortgage practices. Federal authorities revoked the firms license to originate mortgages insured by FHA.
“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 Therefore, Ideal has been immediately withdrawn from participating in the FHA-insured mortgage program.”
The Fed’s came down on this lender 6 six weeks after U.S. Attorney for the Eastern District of New York Benton Campbell had pursued and injunction against Lend America and Michael Ashley, its executive VP and chief business strategist. Federal authorities had filed a 155-page civil complaint against Lend America in October for allegedly committing $14 million in fraud. The fraud was committed in the underwriting guidelines of these FHA loans.
Ideal Mortgage Bankers, the parent bankers of Lend America was advertising throughout the US during the housing crisis and the company has grown much larger over the last year. It is unknown at this time how many victims are involved in this fraud.
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 Ideal and one of its senior managers. The action taken today follows a Quality Assurance review that found Ideal 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;
•Submitting false certifications to HUD in connection with the submission of its Yearly Verification Report.
Ideal has 30 days to challenge the withdrawal action and the imposition of civil money penalties before an Administrative Law Judge.
The Department of Housing and Urban Development, led by HUD Secretary Shawn Donovan is cracking down against lenders that abuse their FHA rights in an effort to limit its liability and risks as more FHA mortgage losses have caused its money reserves backing these loans to plummet.
Here is a safe FAQ sheet from HUD on what affected Lend America borrowers can do:
FHA‐insured Loans Associated with Lend America and Lending Key (Ideal Mortgage Bankers)
Questions and Answers for Consumers
Consumer Questions Answers & Your Action Plan – What you should do
I have a loan with Lend America/Lending Key and I heard they have been suspended. What happens to my
loan?
• At this time loan servicing is unaffected. You should continue making your payments to Lend
America/Lending Key. It is possible that this will change.
• If your loan is still in process, and has not yet closed, you will need to transfer your file to a new FHAapproved
lender. To find one near you, visit our website at http://www.hud.gov/ll/code/llslcrit.cfm
• Per Lend America’s website (www.lendamerica.com), your new lender will need to follow these steps
to have your case number and appraisal (if applicable) transferred to them:
o Send all FHA Case Number Transfer Requests to transfer@lendamerica.com.
o Please provide the FHA Case Number, your Lender ID, your Sponsor ID (if applicable) to the above email.
o Within 24 hours, after receipt of email, the case number will be transferred to the proper parties.
Lend America and Ideal Mortgage Bankers released this press relase in response to the Fed shut down:
MELVILLE, N.Y., Nov. 30 /PRNewswire/ — Lend America today commented on The Federal Housing Administration (FHA) withdrawing its FHA-approval from Ideal Mortgage Bankers.
The Company’s Statement:
“The Company is surprised and disappointed by today’s action by the U.S. Department of Housing and Urban Development’s Mortgagee Review Board. 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.”
About Lend America
Lend America, a National Mortgage Banking Organization, has proudly served the residential mortgage marketplace for over 20 years. The Company is one of the most successful direct to consumer lenders in the United States and is one of the region’s largest and most well known FHA direct lenders and is a GNMA approved mortgage backed securities issuer. In addition, the Company has a wholesale lending platform for quality mortgage brokers, a correspondent lending platform for FHA direct endorsed lenders and a direct-to-investor exit strategy solution to help leading Wall Street firms and hedge funds quickly monetize their residential mortgage portfolios. The Company offers a wide range of home purchase and refinance programs to meet their clients’ individual requirements. Lend America employs approximately 600 employees and is located at 520 Broadhollow Road, Melville, New York, 11747. For more information on Lend America, visit www.lendamerica.com.
