The Department of Housing and Urban Development’s (HUD) Mortgagee Review Board issued a notice of violation against Ideal Mortgage Bankers, parent company of Lend America and Lending Key.
HUD notified the company Tuesday that it uncovered numerous violations of the Federal Housing Administration’s (FHA) origination and underwriting requirements, including submitting false certifications and failing to document the borrower’s income and creditworthiness.
"Any FHA-approved lender that seeks to do business with us must follow our standards, it’s just that simple," said FHA Commissioner David Stevens. "If we determine that our partners are not playing by the rules, they’ll cease being our partners. It’s not just about protecting the financial health of the FHA insurance fund – this is about protecting each and every family that looks to the FHA for safe and secure mortgage financing."
The proposed sanctions and penalties against the individual underwriters are based on their approval of mortgages for FHA insurance. Moreover, HUD alleges that these underwriters falsely certified to the Department that the loans were originated in compliance with FHA requirements and were eligible for FHA mortgage insurance.
The US also filed a civil suit against the company alleging that Lend America falsely certified to HUD that borrowers who received over $14 million in loans met HUD’s lending requirements when, in fact, the defendants knew they did not.
Late Wednesday, U.S. District Judge Joseph F. Bianco of the Eastern District of New York denied a government request for a temporary restraining order that would prevent Lend America from making such loans while a civil suit seeking a permanent ban is being decided.
Lend America’s parent company, Ideal Mortgage Bankers had a small reverse mortgage operation. According to HUD data, the company endorsed 192 HECMs through August. You can see their volume from 2009 in the graph below.