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UPDATE 1-FHA strips Ideal and Lend America of approvals
December 1, 2009 / 12:43 AM / 8 years ago

UPDATE 1-FHA strips Ideal and Lend America of approvals

(Adds details, FHA and company comment)

By Al Yoon

NEW YORK, Nov 30 (Reuters) - The U.S. Federal Housing Administration said it withdrew approval from Ideal Mortgage Bankers and affiliate Lend America for making government-backed mortgages on Monday.

The FHA imposed civil money penalties of $512,500 against Ideal, and said the U.S. Attorney’s Office for the Eastern District of New York was pursuing a civil fraud injunction against the company and a senior manager.

Ideal Mortgage does business as Lend America and Lending Key, the FHA said in its statement. Abuses included submitting false certifications and approving loans that failed to meet credit standards, it said.

“We have no tolerance for lenders who abuse their FHA-approval,” FHA Commissioner David Stevens said in a statement. “The evidence in this case points to a disturbing pattern of senior officials and underwriters, either not knowing what they were doing, or not caring.”

A crackdown on quality of FHA-backed lending comes as the housing agency’s capital reserves have recently fallen below legally required levels.

Monday’s action is part of a larger enforcement effort by the U.S. Department of Housing and Urban Development against lenders that abuse their rights to make FHA-backed loans, which have been more coveted since the housing crisis shut other programs geared toward low- and moderate-income Americans.

In August, the FHA suspended Taylor Bean & Whitaker after finding the lender misrepresented an audit that raised concerns of fraud.

Taylor Bean was the nation’s 12th largest mortgage lender from January to June. Lend America is smaller, but was the 22nd largest originator of FHA loans based on originations in the two years through September 30.

Ideal and Lend America have 30 days to challenge the FHA action and civil penalties, the FHA said.

Lend America “is surprised and disappointed by today’s action,” it said in an e-mailed statement, adding that it is reviewing its options.

Lend America employs about 600 people in its Melville, New York headquarters.

In October, the FHA accused Lend America of falsely certifying that borrowers who received more than $14 million in loans met HUD’s lending requirements.

The FHA’s Mortgagee Review Board also made its decision based on Ideal’s failures to document borrower’s income and creditworthiness, and closing a loan with an excessive broker fee paid to an approved FHA loan correspondent.; +1 646-223-6347; Reuters Messaging:

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