The Federal Housing Administration’s Mortgagee Review Board (MRB) said it’s permanently banning Cambridge Home Capital, LLC, (CHC) a New York based lender for gross violations of FHA underwriting standards.
According to FHA, CHC failed to maintain and implement a required quality control plan, failed to document the stability and/or source of borrowers’ income, approving loans with grossly excessive debt-to-income ratios without compensating factors to justify approval; and using conflicting information in originating and obtaining FHA mortgage insurance.
“The serious and egregious violations we discovered require strong action in order to protect the best interests of FHA and the public,” said FHA Commissioner David H. Stevens. “FHA’s underwriting standards are there for a reason – to ensure sustainable homeownership for borrowers and to protect the financial health of the insurance fund so we can continue to meet our public mission.”
In addition to the ban, FHA’s MRB will seek a monetary penalty of $182,000.
While CHC may appeal FHA’s withdrawal by submitting a written request for a hearing before an Administrative Law Judge within 30 days, the filing of an appeal does not delay the actions said FHA. A complaint seeking civil money penalties will be served on the company in due course and the Company will have the opportunity to contest the imposition of the penalties before an Administrative Law Judge.
The company’s reverse mortgage division operates under the name Cambridge Senior Capital Reverse Mortgages. According to Department of Housing and Urban Development data, the company originated 17 HECM reverse mortgages in 2010, down from 52 units in 2009. For more information on the company, see their listing on ReverseBase.