SCHUMER CALLS ON FHA TO ENSURE THAT ALL QUALIFIED AND APPROVED LEND AMERICA BORROWERS CAN SECURE NEW MORTGAGES AFTER COMPANY IS SHUT DOWN BY THE FEDS
Long Island Based Lend America Was the Largest FHA Mortgage Lender in the NY Metro Area – Now Shut Down After Reports of Significant Fraud
Though the Accused Lender Must be Punished to the Fullest Extent of the Law, Legitimate NY Borrowers On the Verge of Closing Could be Left Out in the Cold
Schumer Calls on Federal Housing Administration to Help Ensure that Legitimate and Qualified Borrowers Secure New, Similar Loans Quickly So They Can Move Forward with Closing
Today, U.S. Senator Charles E. Schumer called on the head of the Federal Housing Administration to aggressively work to ensure that any legitimate, qualified, and previously approved Lend America borrower is able to secure a new mortgage – at a similar rate and price – after the FHA, along with the Department of Justice, shut down the company due to reports of rampant fraud. Lend America, based in Melville, was the largest lender of FHA backed mortgages in the New York metro area, servicing thousands of mortgages and customers on Long Island and throughout the country. Schumer said that there could be many New Yorkers who were actively working through the mortgage approval process with Lend America and were well qualified and even approved for a loan, but now are unable to close since the lender was shut down. Schumer today said that the FHA, in addition to ensuring that any active borrower who qualifies for an FHA guarantee is able to continue their mortgage without interruption, should help previously approved, legitimate and qualified borrowers close on a new, similar mortgage with another lender.
“Hopeful New York homebuyers should not be left holding the bag now that Lend America has been shutdown. The company appears to have engaged in deplorable scams that defrauded the government and threatened the integrity of the programs designed to help our housing market and entire economy recover and must be punished to the fullest extent of the law.
However, in order to contain the damage of this fraud, the FHA has to move fast to ensure that qualified and legitimate customers who were already approved to move forward with their mortgages and close on their new homes are able too. Not one qualified and approved New Yorker should be shut out from buying a home because of some other entities wrongdoing.”
Lend America had grown exponentially since switching its business model from subprime loans to FHA mortgages before the housing crisis began. The company had recently doubled the employees it employed, boasting more than 600 employees and citing the FHA business as the reason for its success. However, the FHA announced this week that its Mortgage Review Board banned the company from making FHA loans after two violations cited in October. HUD said Lend America violated numerous FHA requirements, such as failing to document borrowers’ creditworthiness and income and submitting false approvals to the department.
Origination of FHA-backed loans has surged in the past two years as the credit crunch and housing crisis shuttered many private funding sources and left borrowers scrambling for help in refinancing loans. To maintain volume, lenders became heavily reliant upon FHA to guarantee loans that do not meet the stricter funding requirements of Fannie Mae and Freddie Mac since their conservatorship in fall 2008.
The company was the largest generator of FHA backed loans in the New York metro area. According to Newsday, Lend America closed 6,986 loans, or $1.36 billion in loans and for this year it projected 12,500 loans closed, for about $2.5 billion. The company serviced about $1.8 billion in loans, he said, and it is not clear whether it will continue to provide that service.
With so many active loans and many more legitimate and qualified borrowers waiting to close on their new homes with a Lend America mortgage, Schumer today sent a personal letter to the FHA Commissioner David Stevens to ensure that these types of borrowers are able to quickly secure new, similarly priced loans, as quickly as possible. Schumer acknowledged that the company has given some direction to its customers, many previously approved and qualified borrowers are on the brink of closing and may not be able to wait. Callers to Lend America offices heard a recorded message telling customers it was stopping operations and that it would honor obligations to past and current borrowers but does not address how it will help customers awaiting closing.
Source: Schumer
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