The Federal Housing Administration (FHA) is permanently withdrawing its approval of Atlanta-based RSA Financial, Inc. and 1st Alliance Mortgage LLC of Houston, Texas. The actions prevent the lenders from originating and underwriting new FHA-insured mortgages or from participating in the FHA single family insurance program said a statement from FHA.
In addition, the U.S. Department of Housing and Urban Development’s Mortgagee Review Board (MRB) also voted to impose a $15,000 civil penalty against RSA and seek $267,900 from 1st Alliance.
HUD’s MRB cited RSA for misleading HUD that it was properly licensed by the Georgia Department of Banking and Finance at the time the company submitted an application to FHA for lender approval. In addition, the MRB alleges that RSA submitted false and/or misleading information regarding the criminal conviction and sanction history of its owner and executive, Ramsey Suphi Agan.
HUD claims that 1st Alliance engaged in prohibited branch arrangements, provided false certifications, failed to implement a Quality Control Plan, and a number of other violations of HUD/FHA standards.
“If lenders want to do business with the FHA, it’s critical that they provide complete and truthful information so that we can properly determine who we’re dealing with,” said FHA Commissioner David Stevens. “If any lender can’t operate within FHA’s guidelines, they can’t do business with us.”
In addition to the withdrawal actions noted above, HUD reached settlement agreements with Paramount Bond and Mortgage Co. and Franklin First Financial, LTD to resolve alleged violations of HUD/FHA requirements.
Paramount agreed to pay a civil penalty to HUD in the amount of $68,500 and indemnify HUD for any losses which have been or may be incurred with respect to seven FHA-insured mortgages. HUD and the St. Louis-based mortgage lender also agreed that the company repay FHA $146,397 in insurance claims already paid on two loans.
Franklin First Financial, Ltd. (FFF) agreed to pay a civil penalty to HUD in the amount of $413,500 and indemnify HUD for any losses which have been or may be incurred with respect to 31 FHA-insured mortgages. HUD and the Melville, New York-based lender agreed that the company will pay FHA for any losses related to these loans if they are in default or go into default for up to five years after they were endorsed. FFF shall also reimburse 78 borrowers the cost of duplicate appraisals and appraisal reviews that the company performed in order to sell these mortgages on the secondary market.
FFF operates a reverse mortgage division named Senior Funding Group, but none of the loans in question were related to the HECM product. The company endorsed 153 HECMs in 2009 and 27 through February of 2010. For more data on the company check out their listing on ReverseBase.