81 FR 29290 - Mortgagee Review Board: Administrative Actions

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal Register Volume 81, Issue 91 (May 11, 2016)

In compliance with Section 202(c)(5) 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.

[Federal Register Volume 81, Number 91 (Wednesday, May 11, 2016)]
[Notices]
[Pages 29290-29292]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-11045]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

[Docket No. FR-5948-N-01]


Mortgagee Review Board: Administrative Actions

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

ACTION: Notice.

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SUMMARY: In compliance with Section 202(c)(5) 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: Nancy A. Murray, Secretary to the 
Mortgagee Review Board, 451 Seventh Street SW., Room B-133/3150, 
Washington, DC 20410-8000; telephone (202) 708-2224 (this is not a 
toll-free number). Persons with hearing or speech impairments may 
access this number through TTY by calling the toll-free Federal 
Information Service at (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 the Department's Mortgagee Review Board (``Board''). In 
compliance with the requirements of Section 202(c)(5), this notice 
advises of actions that have been taken by the Board in its meetings 
from October 1, 2014 to September 30, 2015.

I. Civil Money Penalties, Withdrawals of FHA Approval, Suspensions, 
Probations, Reprimands, and Settlements

1. Allied First Bank, SB, Oswego, IL [Docket No. 15-1506-MR]
    Action: On June 19, 2015, the Board entered into a settlement 
agreement with Allied First Bank, SB (``AFB'') that required AFB to pay 
a civil money penalty in the amount of $17,000 without admitting fault 
or liability.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: AFB (a) improperly used the 
name of FHA in certain correspondence to imply the correspondence was 
from and/or endorsed by HUD/FHA; (b) failed to timely notify HUD that 
AFB has entered into a written agreement with the Federal Reserve Board 
of Chicago on May 22, 2014 and; (c) failed to timely notify HUD that 
AFB had entered into a consent order with the Federal Deposit Insurance 
Corporation and the State of Illinois Department of Financial and 
Professional Regulation.

2. American Home Free Mortgage, Prosper, TX [Docket No. 14-1682-MR]

    Action: On May 21, 2015, the Board voted to withdraw the FHA 
approval of American Home Free Mortgage (``AHFM'') on a permanent 
basis. On July 24, 2015, the Board entered into a settlement agreement 
with AHFM that required AHFM to pay a civil money penalty in the amount 
of $169,419, and to abide by the Board's action concerning the 
permanent withdrawal of its FHA approval.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: AHFM (a) submitted false 
certifications to HUD/FHA in 2010, 2012 and 2013 for the annual 
recertifications of its FHA approval; (b) failed to ensure that 
individuals originating FHA insured loans were exclusively employed by 
AHFM; (c) failed to implement a Quality Control Plan in compliance with 
HUD/FHA requirements; (d) failed to conduct Quality Control reviews in 
accordance with HUD/FHA requirements; (e) participated in a scheme to 
inflate the amount of fees collected in loan transactions by disguising 
them as construction fees; (f) submitted loan case binders that falsely 
identified fees as construction costs or fees; (g) provided false 
certifications to HUD/FHA regarding conflicts of interests; (h) allowed 
personnel involved in the day-to-day origination process to conduct 
Quality Control reviews; (i) allowed the identification number of a 
terminated employee to be used to access FHA Connection; and (j) failed 
to require it's appraiser to explain the use of a comparable sale that 
was over 12 months old.

3. Bogman Inc., Silver Spring, MD [Docket No. 15-1507-MR]

    Action: On August 11, 2015, the Board entered into a settlement 
agreement with Bogman Inc., (``Bogman'') that required Bogman to pay a 
civil money penalty in the amount of $50,000 without admitting fault or 
liability and to submit, on a quarterly basis during the period of one 
year, written reports, describing the methodology and findings of 
quality control reviews performed by an independent third party 
regarding Bogman's compliance with applicable HUD Handbooks and 
Mortgagee Letters, including compliance with servicing and loss 
mitigation requirements.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: Bogman (a) failed to properly 
establish and implement a Quality Control Plan; (b) used the services 
of a third party servicer that was not an approved HUD/FHA approved 
mortgagee; (c) failed to properly service defaulted FHA insured loans 
and failed to ensure its foreclosure management review checklist was in 
compliance with HUD/FHA requirements; and (d) failed to use the proper 
loss mitigation techniques with borrowers.

4. City First Mortgage Services LLC., Bountiful, UT [Docket No. 15-
1657-MR]

    Action: On June 30, 2015, the Board issued a letter of reprimand to 
City First Mortgage Services, LLC., (``CFMS''), and also required CFMS 
to pay a civil money penalty in the amount of $40,500.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: CFMS (a) failed to comply with 
Generally Accepted Accounting Principles; (b) falsely certified to HUD/
FHA that it had complied with all HUF/FHA regulations in its June 25, 
2014 annual certification; (c) failed to promptly notify HUD/FHA it had 
entered into a consent order with the State of Illinois Department of 
Financial and Professional Regulation, Division of Banking and paid a 
$2,500 fine to settle allegations that it allowed an unlicensed office, 
branch manager and loan originator to conduct business without the 
proper licenses or sponsorship from CFMS; and (d) failed to timely 
notify HUD/FHA that it had entered into a

[[Page 29291]]

settlement agreement with the State of California.

5. Fifth Third Bank, Cincinnati, OH [Docket No. 16-1634-MR]

    Action: On September 15, 2015, the Board voted to accept a proposed 
settlement between the United States and Fifth Third Bank (``FTB''). 
Pursuant to the terms of the Settlement, FTB agreed to: (a) Pay a total 
of $85 million to resolve potential liability under the False Claims 
Act in connection with 519 loans that went to claim; (b) indemnify HUD/
FHA for the life of the loan on all losses associated with 920 loans; 
(c) make an administrative payment totaling $ 2,034,000; and (d) make 
an administrative payment to HUD/FHA of $441,000.
    Cause: The Board took this action based on (a) FTB's own self-
reporting that it had not fully complied with its obligation to notify 
HUD/FHA of early payment defaults in loans that contained significant 
deficiencies, and (b) an investigation by the U.S. Attorney's Office 
for the Southern District of New York based on a Qui Tam action.

6. First Liberty Financial Group, Louisville, KY [Docket No. 15-1500-
MR]

    Action: On September 11, 2015, the Board entered into a Settlement 
Agreement with First Liberty Financial Group, (``FLFG'') that required 
FLFG to pay a civil money penalty in the amount of $66,700 without 
admitting fault or liability.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: FLFG (a) failed to establish 
and implemented a Quality Control Plan in accordance with HUD/FHA 
requirements; (b) failed to ensure it conducted reviews of loans which 
went into default within the first six months of repayment; (c) failed 
to evidence that it had conducted a pre-insurance review for loans 
insured under the Lender Insurance Program; (d) failed to comply with 
HUD/FHA rules, regulations and guidelines in originating and 
underwriting FHA insured loans; (e) failed to sign the certification on 
page 4 of the final HUD form 92900-A for 26 loans; (f) failed to comply 
with HUD/FHA documentation requirements for the borrowers' source of 
funds for one loan; (g) failed to timely remit Mortgage Insurance 
Premiums as required by HUD/FHA; and (h) failed to notify HUD/FHA of a 
business change.

7. Infinity Home Mortgage Company, Inc. Cherry Hill, NJ [Docket No. 14-
1641-MR]

    Action: On November 10, 2014, the Board issued a Notice of 
Administrative Action permanently withdrawing the FHA approval of 
Infinity Home Mortgage Company, Inc., (``IHMC'').
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: IHMC (a) failed to establish 
and implemented a Quality Control Plan in accordance with HUD/FHA 
requirements; (b) failed to complete Quality Control reviews timely and 
respond to Quality Control review findings reported by HUD/FHA; (c) 
failed to ensure it conducted early payment default Quality Control 
reviews in accordance with HUD/FHA requirements; (d) failed to ensure 
borrowers were eligible for FHA-insured financing; (e) failed to 
properly document the borrowers' source/adequacy of funds used for down 
payments and/or closing costs; (f) failed to properly document the 
income utilized to qualify borrowers; (g) failed to resolve 
discrepancies and/or conflicting information prior to submitting loans 
for FHA approval and ensure outstanding judgments were satisfied; (h) 
failed to ensure the Uniform Residential Appraisal Report supported the 
final value conclusion and/or failed to ensure the health and safety of 
the subject property; and (i) failed to comply with HUD/FHA 
documentation requirements.

8. Integrity Home Loans of Central Florida, Lake Mary, FL [Docket No. 
14-1727-MR]

    Action: On March 19, 2015, the Board voted to withdraw the FHA 
approval of Integrity Home Loans of Central Florida, (``IHL'') for a 
period of one year. On May 18, 2015, the Board entered into a 
settlement agreement with IHL that required IHL to pay a civil money 
penalty in the amount of $3,000 and abide by the Board's withdrawal of 
IHL's FHA approval.
    Cause: The Board took this action based on the following violation 
of HUD/FHA requirements alleged by HUD: IHL operated a branch office in 
violation of HUD/FHA requirements.

9. MetLife Bank, N.A., Morristown, NJ [Docket No.16-1631-MR]

    Action: On February 24, 2015, the Board voted to accept the terms 
of a settlement agreement between the United States of America, 
(``USA'') and MetLife Bank, N.A., (``MLB'') that required MLB to pay 
$123,500,000 to the USA. As part of the settlement, the Board released 
MLH from liability for any civil money penalty due to improper 
origination of FHA-insured loans for which FHA paid a claim for 
mortgage insurance through August 25, 2014. The settlement expressly 
excluded streamline refinances and Home Equity Conversion Mortgage 
loans from the release.
    Cause: The Board took this action in order to resolve allegations 
that MetLife failed to properly underwrite FHA-insured loans that 
resulted in claims being submitted to FHA through August 25, 2014.

10. Putnam Bank, Putnam, CT [Docket No. 15-1504-MR]

    Action: On June 4, 2015, the Board entered into a settlement 
agreement with Putnam Bank, (``PB'') that required PB to pay a civil 
money penalty in the amount of $5,000.
    Cause: The Board took this action based on the following violation 
of HUD/FHA requirements alleged by HUD: PB failed to obtain, prior to 
closing, documentation of the terms of a $5,000 loan from the 
borrower's father that the borrower used for the down payment.

11. Residential Finance Corporation, Columbus, OH [Docket No. 14-1708-
MR]

    Action: On April 28, 2015, the Board issued a Notice of 
Administrative Action to Residential Finance Corporation (``RFC'') 
withdrawing RFC's FHA approval for a period of one year.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: RFC (a) failed to ensure the 
borrower made the minimum required investment; (b) failed to document a 
borrower's funds to close on a loan; (c) failed to resolve questions 
concerning a borrower's delinquent federal debt; and (d) failed to 
properly calculate a borrower's income used to qualify the borrower.

12. Reverse Mortgage Solutions, Inc., Spring, TX [Docket No. 16-1632-
MR]

    Action: On May 21, 2015, the Board voted to accept a settlement 
agreement between Walter Investment Management Corporation and its 
subsidiary Reverse Mortgage Solutions, Inc. (``RMSI'') and the United 
States that required RMSI to pay the United States the amount of 
$26,250,000.00. Pursuant to the terms of the settlement, the Board 
settled potential administrative actions by the Board against RMSI in 
connection with insurance claims filed from August 13, 2009 to December 
15, 2014 for loans insured under the Home Equity Conversion (``HECM'') 
Program.
    Cause: The Board took this action based on a complaint filed under 
the False Claims Act that alleged that RMSI

[[Page 29292]]

had failed to self-curtail debenture interest with respect to HECM 
claims that were filed with HUD, and that a subsidiary of RMSI acted as 
the real estate agent for the disposition of the HECM properties after 
foreclosure, which resulted in the payment of commissions in violation 
of the anti-referral fee prohibitions of the Real Estate Settlement 
Procedures Act.

13. Sahara Mortgage Corporation, Las Vegas, NV [Docket No. 15-1502-MR]

    Action: On March 30, 2015, the Board issued a Notice of 
Administrative Action withdrawing the FHA approval of Sahara Mortgage 
Corporation, (``SMC'') for a period of one year.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: SMC failed to pay HUD in 
accordance with SMC's indemnification agreements with HUD/FHA.

14. USLending & Finance, LTD, Downers Grove, IL [Docket No. 15-1505-MR]

    Action: On July 1, 2015, the Board entered into an agreement with 
USLending &Finance, LTD (``USLending'') that required USLending to pay 
$18,500 without admitting fault or liability.
    Cause: The Board took this action based on the following violations 
of HUD/FHA requirements alleged by HUD: USLending (a) failed to provide 
documentation it had implemented a Quality Control Plan in accordance 
with HUD/FHA requirements; and (b) failed to ensure its officers and 
employees were exclusively employed by USLending.

II. Lenders That Failed To Timely Meet Requirements for Annual 
Recertification of HUD/FHA Approval

    Action: The Board entered into settlement agreements with the 
lenders listed below, which required the lender to pay a civil money 
penalty without admitting fault or liability.
    Cause: The Board took this action based upon allegations that the 
lenders listed below failed to comply with the Department's annual 
recertification requirements in a timely manner.

1. BCB Community Bank, Bayonne, NJ ($16,000) [Docket No.15-1666-MRT]
2. Bondcorp Realty Services, Inc., Newport Beach, CA ($4,250) [Docket 
No.15-1859 MRT]
3. Case Credit Union, Lansing, MI ($3,500) [Docket No.15-1608-MRT]
4. Citizens Trust Bank, Atlanta, GA ($3,500) [Docket No.15-1760-MRT]
5. City National of New Jersey, Newark, NJ ($3,500) [Docket No.15-1624-
MRT]
6. Darien Rowayton Bank, Darien, CT ($3,500) [Docket No.15-1603-MRT]
7. First Key Mortgage, LLC, Rye Brooke, NY ($3,500) [Docket No.14-1706-
MRT]
8. Lone Star National Bank, McAllen, TX ($3,500) [Docket No.14-1569-
MRT]
9. Members Cooperative Credit Union, Cloquet, MN ($3,500) [Docket 
No.15-1600-MRT]
10. Northland Financial, Steele, ND ($3,500) [Docket No.15-1614-MRT]
11. Prairie Bank of Kansas fka Farmers National Bank, Stafford, KS 
($3,500) [Docket No.14-1661-MRT]
12. Urban Fulfillment Services, LLC f/k/a Prodovis Mortgage, LLC, 
Broomfield, CO ($3,500) [Docket No.13-1482-MRT]
13. Progressive Bank, Monroe, LA ($3,500) [Docket No.15-1591-MRT]
14. Teamsters Credit Union, Detroit, MI ($3,500) [Docket No.15-1612-
MRT]
15. Valley Exchange Bank of Lennox, Lennox, SD ($3,500) [Docket No.15-
1606-MRT]

III. Lenders That Failed To Meet Requirements for Annual 
Recertification of HUD/FHA Approval

    Action: The Board voted to withdraw the FHA approval of each of the 
lenders listed below for a period of one (1) year.
    Cause: The Board took this action based upon allegations that the 
lenders listed below were not in compliance with the Department's 
annual recertification requirements.

1. Acadia Federal Savings Bank, Falls Church, VA [Docket No.15-1754-
MRT]
2. Approved Home Lending, Inc., Miami FL [Docket No.15-1509-MRT]
3. Blufi Lending Corporation, San Diego, CA [Docket No.15-1757-MRT]
4. Central State Bank., Quincy, IL [Docket No.15-1759-MRT]
5. Classic Home Financial, Inc., Houston, TX [Docket No.15-1762-MRT]
6. Connecticut River Bank., Charlestown, NH [Docket No.15-1764-MRT]
7. Consumers Mortgage Corp, Middletown, NJ [Docket No.15-1765-MRT]
8. Denver Mortgage Company, Greenwood Village, CO [Docket No.15-1766-
MRT]
9. Dominion Residential Mortgage, LLC., Fairfax, VA [Docket No.15-1767-
MRT]
10. First Mutual Corporation, Cherry Hill, NJ [Docket No.13-1768-MRT]
11. Firstrust Mortgage, Inc., Overland Park, KS [Docket No.15-1627-MRT]
12. Franklin Credit Management Corporation, Jersey City, NJ [Docket 
No.14-1702-MRT]
13. Funding Source, LLC., Syracuse, NY [Docket No.15-1771-MRT]
14. GMS Funding LLC., West Columbia, SC [Docket No.15-1722-MRT]
15. Golden Pacific Bank, Sacramento, CA [Docket No.15-1773-MRT]
16. Guardian Credit Union, West Allis, WI [Docket No.15-1634-MRT]
17. Homefirst Mortgage LLC., Jackson, MS [Docket No.15-1522-MRT]
18. Jayco Capital Group, Inc., Irvine, CA [Docket No.15-1775-MRT]
19. Landmark Bank NA, Columbia, MO [Docket No.14-1551-MRT]
20. Liberty Capital Financial, Damascus, MD [Docket No.15-1776-MRT]
21. Merchants & Planters Bank, Boilvar, TN [Docket No.15-1777-MRT]
22. Mortgage Bank of California, Manhattan Beach, CA [Docket No.15-
1778-MRT]
23. Prime Bank, Edmond, OK [Docket No.15-1621-MRT]
24. Retreat Capital Management Inc., Irving, TX [Docket No.15-1779-MRT]
25. Rocky Mountain Bank, Jackson, WY [Docket No.15-1780-MRT]
26. South Valley Bank and Trust, Klamath Falls, OR [Docket No.15-1651-
MRT]
27. Spectra Funding Inc., Carlsbad, CA [Docket No.15-1782-MRT]
28. StellarOne Bank, Christianburg, VA [Docket No.15-1783-MRT]
29. Steward Investments, Inc., Carlsbad, CA [Docket No.15-1784-MRT]
30. The Cadle Company, Newton Falls, OH [Docket No.14-1648-MRT]
31. The Lending Company Inc., Phoenix, AZ [Docket No.15-1787-MRT]
32. Washington Savings Association, Philadelphia, PA [Docket No.15-
1789-MRT]
33. Workers Credit Union, Fitchburg, MA [Docket No.15-1510-MRT]

    Date: May 3, 2016.
Edward L. Golding,
Principal Deputy Assistant Secretary, Chairman, Mortgagee Review Board.
[FR Doc. 2016-11045 Filed 5-10-16; 8:45 am]
 BILLING CODE 4210-67-P