Opinion ID: 1931243
Heading Depth: 3
Heading Rank: 3

Heading: Lenders

Text: American Skycorp, Inc. is a residential mortgage lender founded and owned principally by Lee P. Woody III. John D. Hall is the minority owner, owning five percent of the company. American Skycorp was licensed as a mortgage lender by the Maryland Commissioner of Financial Regulation and was an FHA Direct Endorsement lender. The Company was the lender for each property in this case and was aware of Shpritz's conduct. Shpritz brought the loan applications to Woody, who assigned them to loan officers. In some transactions, Woody acted as the loan officer. In others, with Woody's knowledge, Shpritz signed as the loan officer for properties, responsible for certifying the seller's information, even though he was the seller. In some cases, Woody overrode the under-writer's objections to and conditions for the loan approvals. American Skycorp abused its authority and violated federal guidelines by: (1) failing to reconcile appraisal report information, including the differences between the owners listed on the appraisals and on the titles; (2) approving loans when borrowers had unacceptable credit histories, including defaults, garnishments, unpaid judgments, negative payment histories, and collection accounts; and (3) failing to reduce sale prices when Shpritz provided gift funds or contributed more than six percent to the buyer's closing costs. Through these abuses, American Skycorp approved federal mortgages inappropriately, thereby enabling Shpritz to sell the properties at artificially inflated costs. As a result of American Skycorp's improprieties, HUD informed the Company in September 1999 that its early default claim rate was 236% higher than the average rate of other comparable lenders in Baltimore. By November 2000, one of American Skycorp's three Maryland offices had surrendered its mortgage lending license, the Maryland Commissioner of Financial Regulation had issued a cease and desist order against the office, and HUD had withdrawn its approval of American Skycorp's Direct Endorsement status and imposed a $220,000 civil penalty against it.