WaPo Investigation says Criminals Working for FHA Approved Lenders

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Despite the Federal Housing Administration withdrawing the approval of more than 1,100 lenders since January, an investigation by the Washington Post found FHA-approved lenders are employing executives with criminal records.

Through documents and interviews, WaPo reports that more than 34,000 home loans have been issued over the past two years by a dozen FHA-approved lenders that have employed people convicted of felonies, banned from the securities industry or previously worked for firms barred by the agency.

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FHA Commissioner David H. Stevens has vigorously defended the agency’s bid to drop lenders with higher than average default rates or evidence of fraudulent loans. “No one can feign that we’re not all over fraud now, in this administration,” Stevens says.

But he added, “By no means do I think are we are out of the woods, yet. . . . There are going to be some of these guys who slip through.”

Executives with criminal records slip through FHA crackdown, documents show

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  • If the feds are unable to catch these guys, why does HUD believe full eagle lenders will be better at it? I once worked at a firm where felons were employed as HECM loan originators. As soon as I became aware of the situation, I left.rnrnThis is yet another reason why all originators should be tested and be subjected to backgound checks. Nationally chartered lenders are pleading about additional costs but so what that is a simple cost of operations. Besides that, we all know that these lenders will NOT reimburse such costs except in special cases (big producers).

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