[Federal Register Volume 60, Number 98 (Monday, May 22, 1995)] [Notices] [Pages 27116-27118] From the Federal Register Online via the Government Publishing Office [www.gpo.gov] [FR Doc No: 95-12460] ======================================================================= ----------------------------------------------------------------------- DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Office of the Assistant Secretary for Housing-Federal Housing Commissioner [Docket No. FR-3911-N-01] Mortgagee Review Board Administrative Actions AGENCY: Office of the Assistant Secretary for Housing-Federal Housing Commissioner, HUD. ACTION: Notice. ----------------------------------------------------------------------- SUMMARY: In compliance with Section 202(c) of the National Housing Act, notice is hereby given of the cause and description of administrative actions taken by HUD's Mortgagee Review Board against HUD-approved mortgagees. FOR FURTHER INFORMATION CONTACT: William Heyman, Director, Office of Lender Activities and Land Sales Registration, 451 Seventh Street, SW., Washington, DC 20410, telephone (202) 708-1515. The Telecommunication Device for the Deaf (TDD) number is (202) 708-4594. (These are not toll-free numbers). SUPPLEMENTARY INFORMATION: Section 202(c)(5) of the National Housing Act (added by Section 142 of the Department of Housing and Urban Development Reform Act of 1989 (Pub.L. 101-235), approved December 15, 1989) requires that HUD ``publish in the Federal Register a description of and the cause for administrative action against a HUD-approved mortgagee'' by the Department's Mortgagee Review Board. In compliance with the requirements of Section 202(c)(5), notice is hereby given of administrative actions that have been taken by the Mortgagee Review Board from January 1, 1995 through March 31, 1995. 1. Randall Mortgage, Inc., Maitland, Florida Action: Proposed Settlement Agreement that includes indemnification to the Department for any claim losses in connection with seven improperly originated loans; payment to the Department of a civil money penalty in the amount of $2,500; and corrective action by the company to assure compliance with HUD-FHA requirements. Cause: A HUD monitoring review that disclosed violations of HUD-FHA requirements that included: Failure to maintain an adequate Quality Control Plan for the origination of HUD-FHA insured mortgages; failure to verify borrowers' source of funds used for downpayment; failure to ensure that borrowers made the minimum required investment in the property; requiring a borrower to deposit excess escrow funds at closing; inadequate or lack of face-to-face interviews with borrowers; and failure to properly complete HUD Form 92900 Applications. 2. West Star Financial Corporation, Centennial Park, Arizona Action: Settlement Agreement that includes payment to the Department of a civil money penalty in the amount of $35,000; indemnification for any claim loss in connection with an improperly originated loan; corrective action to assure compliance with HUD-FHA requirements; and submission of a report to the Board compiled by an independent Certified Public Accountant at the end of a six-month period with respect to the company's compliance with HUD-FHA requirements. Cause: A HUD monitoring review which disclosed violations of HUD- FHA loan servicing and origination requirements that included: Failure to maintain an adequate Quality Control Plan for the servicing and origination of HUD-FHA insured mortgages; failure to maintain staff trained in HUD-FHA requirements; failure to properly service delinquent mortgages; failure to properly administer the assignment program; failure to comply with property inspection, preservation and protection requirements; failure to refund excess escrow funds to mortgagors; failure to establish controls to ensure timely mortgagor escrow payments; failure to remit accurate [[Page 27117]] mortgage insurance premiums; failure to enter into reasonable forebearance agreements; failure to meet the reporting requirements of the Single Family Default Monitoring System; failure to timely remit One-Time Mortgage Insurance Premiums; payment of loan origination fees not proportionate to the value of work performed; and failure to ensure that borrowed funds were not used to close a HUD-FHA insured mortgage. 3. F.C. Chadwick Financial, Cerritos, California Action: A Settlement Agreement that includes indemnification to the Department for any claim losses in connection with six improperly originated Title I loans; and corrective action to assure compliance by the company with HUD-FHA Title I program requirements. Cause: A HUD monitoring review that cited violations by the company of HUD-FHA Title I property improvement loan program requirements which included: Operating an unapproved branch office; payment of ineligible referral fees; failure to verify the source of borrowers' initial payment; and failure to meet program requirements for the promissory note. 4. First Financial Funding Group, Mission Viejo, California Action: Settlement Agreement that includes indemnification to the Department for any claim losses in connection with five improperly originated Title I loans; payment to the Department of a civil money penalty in the amount of $1,000; and corrective action to assure compliance with HUD-FHA Title I program requirements. Cause: A HUD monitoring review that cited violations by the company of HUD-FHA Title I property improvement loan program requirements that included: Failure to document the source of funds required for the borrowers' initial payment; failure to ensure that borrowers provided detailed descriptions of work improvements; and failure to comply with HUD-FHA reporting requirements under the Home Mortgage Disclosure Act (HMDA). 5. Magna Financial Corporation, Irvine, California Action: Proposed Settlement Agreement that includes indemnification to the Department for any claim losses in connection with five improperly originated Title I loans; payment to the Department of a civil money penalty in the amount of $1,000; and corrective action to assure compliance with HUD-FHA requirements. Cause: A HUD monitoring review that disclosed violations by the company of HUD-FHA Title I property improvement loan program requirements that included: Failure to verify borrowers' source of funds required for initial payment; failure to property verify borrower's income; requiring a minimum loan amount; failure to meet program requirements for the promissory note; failure to ensure that detailed descriptions of improvements were provided by borrowers; and failure to comply with HUD-FHA reporting requirements under the Home Mortgage Disclosure Act (HMDA). 6. Greystone Servicing Corporation, Inc., New York, New York Action: Proposed Settlement Agreement that includes a payment to the Department and assurance by the company of compliance with the requirements of the Government National Mortgage Association (GNMA). Cause: Violation of GNMA requirements resulting from the improper termination of 57 GNMA mortgage-backed securities pools. 7. Whitehall Funding, Inc., Davenport, Iowa Action: Proposed Settlement Agreement that includes a payment to the Department and assurance by the company of compliance with the requirements of the Government National Mortgage Association (GNMA). Cause: Violation of GNMA requirements resulting from the improper termination of 13 GNMA mortgage-backed securities pools. 8. Washington Credit Union, Lynwood, Washington Action: Proposed Settlement Agreement that includes the payment of a civil money penalty to the Department in the amount of $10,000; indemnification for one improperly originated Title I loan; and corrective action to assure compliance with HUD-FHA Title I program requirements. Cause: A HUD monitoring review that disclosed violations of HUD-FHA Title I property improvement loan program requirements that included: Failure to comply with HUD-FHA reporting requirements under the Home Mortgage Disclosure Act (HMDA); failure to comply with dealer approval requirements; failure to report to HUD-FHA borrowers' uncompleted property improvements; failure to resolve a borrower complaint against a dealer; and failure to verify a borrower's source of funds for the required initial payment. 9. Indigo Mortgage Services, Inc., Santa Ana, California Action: Withdrawal of HUD-FHA mortgagee approval. Cause: Failure by the company to comply with the terms and conditions of a Settlement Agreement with the Department and to indemnify HUD in the amount of $49,724 for its claim loss in connection with an improperly originated HUD-FHA insured mortgage. 10. Beacon Mortgage Company, Dallas, Texas Action: Letter of Reprimand and proposed civil money penalty in the amount of $2,000. Cause: Failure by the company to comply with HUD-FHA requirements and to submit to the Department physical inspection reports with respect to two HUD-FHA insured multifamily projects. 11. Mortgage Systems, Inc., d/b/a Associated Mortgage Bankers, Las Vegas, Nevada Action: Withdrawal of HUD-FHA mortgagee approval and proposed civil money penalty in the amount of $75,000. Cause: A HUD monitoring review that cited the company for violations of HUD-FHA program requirements which included: Failure to comply with conditions of probation previously imposed by the Board; failure to implement an adequate Quality control Plan; failure to remit mortgage insurance premiums within l5 days after loan closing; failure to submit closed loans for endorsement within 60 days after loan closing; failure to meet annual recertification requirements regarding amount of liquid assets; submission of false information; failure to document the borrower's source of funds for downpayment and closing costs; failure to correctly calculate the borrower's income for loan approval; failure to ensure that the borrower made the minimum required investment; use of mortgage brokers to originate loans and payment of ``kickbacks'' to such brokers; non-compliance with HUD's conflict-of- interest prohibited payments provisions; failure to conduct face-to- face interviews; and allowing loan correspondents to improperly close loans in the name of the company. [[Page 27118]] Dated: May 16, 1995. Nicolas P. Retsinas, Assistant Secretary for Housing-Federal Housing Commissioner. [FR Doc. 95-12460 Filed 5-19-95; 8:45 am] BILLING CODE 4210-27-P