The Federal Housing Administration (FHA) has permanently withdrawn its approval of two lenders: Atlanta-based RSA Financial Inc. and Houston-based 1st Alliance Mortgage LLC. The FHA's actions prevent these lenders from originating and underwriting new FHA-insured mortgages or from participating in the FHA single-family insurance program.
The U.S. Department of Housing and Urban Development's (HUD) 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 1st Alliance engaged in prohibited branch arrangements, provided false certifications, failed to implement a quality control plan, and committed a number of other violations of HUD/FHA standards.
‘If any lender can't operate within FHA's guidelines, they can't do business with us,’ states FHA Commissioner David Stevens.
HUD also has announced that two lenders – Franklin First Financial Ltd. (FFF) and Paramount Bond and Mortgage Co. Inc. – have agreed to pay civil penalties to the agency. FFF, based in Melville, N.Y., has agreed to pay a $413,500 penalty and to indemnify HUD for any losses that have been or may be incurred with respect to 31 FHA-insured mortgages.
The lender will reimburse the 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.
Paramount Bond and Mortgage, based in St. Louis, has agreed to pay $68,500 and to indemify HUD for any losses incurred with respect to seven FHA-insured mortgages. The lender will also repay the FHA $146,397 in insurance claims already paid on two loans.
SOURCE: Federal Housing Administration