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Lend America Barred from FHA and Ginnie Mae
I wrote about Lend America earlier last month here on my Flipping Frenzy blog. The article concerned Lend America’s negative esteem among the halls of the Housing and Urban Development (HUD) for having, “…a default rate that is eight times the industry’s average.”
Within 48 hours, first the Federal Housing Administration (FHA), then the Government National Mortgage Association (Ginnie Mae) the next day withdrew their approval for Lend America to participate in the FHA single family insurance program.
A national mortgage lender, Lend America is known for its aggressive media marketing campaigns: full-page newspaper ads and television infomercials to solicit business from homeowners facing foreclosure, can no longer originate or underwrite FHA loans or issue Ginnie Mae securities.
The FHA also imposed civil money penalties against the Melville, N.Y. lender for $512,500 based upon two notices of violation issued to the Company last month. Lend America has 30 days to challenge the withdrawal action and the imposition of civil money penalties before an Administrative Law Judge. The action taken today follows a Quality Assurance review that found Lend America, also doing business as Ideal Mortgage and Lending Key violated a number of HUD/FHA requirements.
Lend America has originated some 11,300 FHA-backed loans over the last two years, ranking them No. 22 out of 13,419 (as of today, make that 13,418) among FHA lenders by volume.
In a terse statement today, a Lend America spokesperson offered this response: “The company is surprised and disappointed by today’s action by the U.S. Department of Housing and Urban Development’s Mortgagee Review Board. The Company is currently reviewing all possible options and remedies in response to this action, and will respond shortly once a decision has been reached.”
“The FHA’s action triggers an immediate default in the Ginnie Mae program,” said Ginnie Mae Executive Vice President Mary Kinney. “We have taken these steps to protect the integrity of our MBS program and the American taxpayer.”
“We have no tolerance for lenders who abuse their FHA-approval,” said FHA Commissioner David Stevens. “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. Therefore, Ideal (Lend America) has been immediately withdrawn from participating in the FHA-insured mortgage program.”
In October, the Justice Department filed suit at HUD’s request to bar Lend America from making government-backed loans, accusing the company of falsely certifying borrowers who received $14 million in FHA-backed loans. However, U.S. District Judge Joseph F. Bianco denied the government’s request for a temporary restraining order that would prevent Lend America from making such loans while a civil fraud injunction against the company and one of its senior managers is being decided.
Lend America was the first lender in the country to receive approval from HUD to underwrite, close and insure Hope for Homeowners loan transactions without prior HUD review. In May, it launched a $500,000 a month advertising campaign with the tagline “Relief Comes In The Form Of Hope” featuring full page ads in The New York Times, The Washington Post, USA Today, The Wall Street Journal, and Newsday. In addition, it launched a series of 60 second format TV commercials and cable TV infomercials featuring phony anchors for the “Mortgage Loan Network.”
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