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[Federal Register Volume 62, Number 32 (Tuesday, February 18, 1997)]
[Notices]
[Pages 7250-7251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-3895]

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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
[Docket No. FR-4209-N-01]

Mortgagee Review Board Administrative Actions

AGENCY: Office of the Assistant Secretary for Housing-Federal Housing 
Commissioner, HUD.

ACTION: Notice.

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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: Morris E. Carter, Director, Office of 
Lender Activities and Program Compliance, 451 Seventh Street, SW, 
Washington, DC 20410, telephone (202) 708-1515. (This is not a toll-
free number). A Telecommunications Device for Hearing and Speech-
Impaired Individuals (TTY) is available at 1-800-877-8339 (Federal 
Information Relay Service).

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 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 October 1, 1996 through December 31, 1996.

1. BancPlus Mortgage, San Antonio, Texas

    Action: Settlement Agreement that includes indemnification to the 
Department for any claim losses in connection with ten improperly 
originated FHA-insured mortgages.
    Cause: A HUD monitoring review that disclosed violations of HUD-FHA 
requirements that include: using alleged false information to originate 
HUD-FHA insured mortgages; failing to properly document the credit 
background and evaluate the credit risk of borrowers; permitting 
mortgagors to handcarry verification of employment forms; requiring 
mortgagors to sign blank documents; and failing to timely remit Up-
Front Mortgage Insurance Premiums (UFMIPs) to HUD-FHA.

2. Grand Capital Mortgage and Investment Company, Inc., Los Angeles, 
California

    Action: Proposed Settlement Agreement that would include: 
indemnification to the Department for any claim losses in connection 
with seven improperly originated FHA insured mortgages; payment to the 
Department of a civil money penalty in the amount of $9,000; and 
corrective action to assure compliance with HUD-FHA requirements.
    Cause: A HUD monitoring review that cited violations of HUD-FHA 
requirements that include: failure to comply with HUD-FHA reporting 
requirements under the Home Mortgage Disclosure Act (HMDA); failure to 
implement and maintain an adequate Quality Control Plan; sharing office 
space and commingling employees with another company; utilizing, and 
paying ``kickbacks'' to an unapproved entity for mortgage origination; 
failure to obtain documents required to accurately evaluate borrowers' 
credit risk; failure to verify the source and adequacy of mortgagors' 
closing funds; improper calculation of borrowers' effective income; 
closing HUD-FHA insured mortgages that exceed the regulatory maximum 
loan amount; deleting a co-mortgagor in a streamline refinance; 
exceeding HUD-FHA ratio guidelines without documenting significant 
compensating factors; and preparing inaccurate Settlement Statements.

3. Diamond Coast Financial, Inc., Hesperia, California

    Action: Probation and a proposed Civil Money Penalty in the amount 
of $32,000.
    Cause: A HUD monitoring review that disclosed violations of HUD-FHA 
requirements that include: Failure to remit to HUD-FHA at least 184 Up-
Front Mortgage Insurance Premiums (UFMIPs); misrepresentation to HUD-
FHA in obtaining approval of independent realtors and brokers as branch 
offices; using non-employees to originate HUD-FHA insured mortgages; 
using, and paying fees to, a mortgage company not approved by HUD-FHA 
to originate HUD-FHA insured mortgages; improperly paying closing costs 
for a mortgagor and failing to honor the mortgagor's request to rescind 
the transaction; and using misleading advertising in connection with 
the Title I program.

4. Trust One Mortgage Corporation, Irvine, California

    Action: Settlement Agreement that includes: indemnification to the 
Department for any claim losses in connection with eight improperly 
originated property improvement loans under the HUD-FHA Title I 
property improvement loan program; payment to the Department of a civil 
money penalty in the amount of $2,000; and corrective action to assure 
compliance with HUD-FHA requirements.
    Cause: A HUD monitoring review that cited violations of HUD-FHA 
Title I program requirements that include: permitting non-employees to 
originate loans; failure to document a borrower's source of funds for 
the initial payment, and permitting the payment to be made from loan 
proceeds; failure to disburse loan proceeds at closing; and use of 
misleading advertising.

5. Barrons Mortgage Corporation, Brea, California

    Action: Proposed Settlement Agreement that would include:

[[Page 7251]]

indemnification to the Department for any claim losses in connection 
with seven improperly originated property improvement loans under the 
HUD-FHA Title I property improvement loan program; payment to the 
Department of a civil money penalty in the amount of $2,000; and 
corrective action to assure compliance with HUD-FHA requirements.
    Cause: A HUD monitoring review that disclosed violations of HUD-FHA 
Title I program requirements that include: use of alleged false tax 
returns to qualify borrowers; accepting verifications of employment and 
W-2 forms containing inconsistent information to qualify borrowers; 
permitting non-approved brokers to originate loans; accepting 
insufficient cost estimates; and use of misleading advertising.

6. Comstock Mortgage, Sacramento, California

    Action: Proposed Settlement Agreement that would include: payment 
to the Department of a civil money penalty in the amount of $4,000; and 
corrective action to assure compliance with HUD-FHA requirements.
    Cause: A HUD monitoring review that cited violations of HUD-FHA 
requirements that include: failure to comply with HUD-FHA reporting 
requirements under the Home Mortgage Disclosure Act (HMDA); and failure 
to maintain an adequate Quality Control Plan for the origination of 
HUD-FHA insured mortgages.

7. Home Owners Funding Corp., Bloomington, Minnesota

    Action: Settlement Agreement that includes: payment to the 
Department of a civil money penalty in the amount of $2,500; and 
corrective action to assure compliance with HUD-FHA reporting 
requirements under the Home Mortgage Disclosure Act (HMDA).
    Cause: Failure to timely submit HMDA data to HUD-FHA.

8. Lovell & Malone, Inc., Nashville, Tennessee

    Action: Settlement Agreement that includes: payment to the 
Department of a civil money penalty in the amount of $2,500; and 
corrective action to assure compliance with HUD-FHA reporting 
requirements under the Home Mortgage Disclosure Act (HMDA).
    Cause: Failure to timely submit HMDA data to HUD-FHA.

    Dated: February 10, 1997.
Nicolas P. Retsinas,
Assistant Secretary for Housing-Federal Housing Commissioner.
[FR Doc. 97-3895 Filed 2-14-97; 8:45 am]
BILLING CODE 4210-27-P
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