The U.S. Department of Housing and Urban Development (HUD) has suspended Michael Primeau, former president of Lend America, from doing any business with HUD following his admission that he engaged in a wide-scale mortgage fraud scheme.
Two years ago, HUD found that Ideal Mortgage Bankers, doing business as Lend America and Lending Key, repeatedly violated the Federal Housing Administration's (FHA) origination and underwriting requirements, including submitting false certifications and failing to document borrower income and creditworthiness.
As a consequence, HUD withdrew the company's FHA approval, preventing the company from originating and underwriting new FHA-insured mortgages or from participating in the FHA single-family insurance program. In addition, Ginnie Mae terminated Lend America as an issuer and seized its portfolio.
Primeau pleaded guilty to charges that he directed employees of Lend America to divert mortgage funds intended to pay off borrowers' first mortgages at refinance closings in order to pay company operating expenses.
‘We take this action to protect the public,’ says HUD's General Counsel Helen Kanovsky. ‘Beyond this particular suspension, the broader message to the lending community should be crystal clear – the federal government will not do business with those who fleece homeowners.’