The Federal Housing Administration (FHA) suspended Equitable Trust Mortgage Corp. on Monday effective immediately.
The action comes after Equitable Trust Mortgage allegedly overcharged 37 borrowers for broker and origination fees beyond those allowed by HUD. The company allegedly charged an additional 1% of the mortgage amount in origination fees on top of the 1% allowed by HUD.
In addition, HUD found that 68% of the effected files were those of minority borrowers, leading them to suspect discrimination.
“It is critical that FHA lenders apply our standards and do not overcharge borrowers,” said FHA Commissioner David Stevens. “The fact that a disproportionate number of these borrowers were minority families is also troubling. I am fully committed to protecting consumers and the fiscal health of the FHA.”
Finally, HUD found that in 21 alleged cases, Equitable Trust Mortgage failed to disclose all origination fees as well as the yield spread premiums in the borrower’s Good Faith Estimates.
The HUD OIG is investigating Equitable Trust Mortgage’s lending practices, and they will be suspended for at least six months due to the severity of the infractions, as well as the risk to taxpayers and the FHA insurance pool. They have 30 days to appeal the suspension.
According to HUD data, Equitable Trust Mortgage had a small reverse mortgage operation, endorsing 36 HECMs in FY 2009.
Write to Reva Minkoff