In an announcement coming today from the HUD Mortgage Review Board (MRB), two FHA-approved lenders will be facing penalties for alleged violation of a variety of FHA lending and marketing standards.

According to HUD, 1st Rate Mortgage, based in Wisconsin, is a non-supervised loan correspondent who violated HUD/FHA’s third party origination restrictions, made false certifications concerning the compliance with these restrictions, and failed to maintain a quality control plan in accordance with HUD/FHA requirements. Due to these violations, the MRB voted to impress $20,000 in civil money penalties.
Access Mortgage Corporation, located in Connecticut is a non-supervised direct endorsement mortgagee, whom HUD says violated HUD/FHA requirements by improperly using the official FHA logo and failing to notify HUD of a change in its “d/b/a” name. These violations will be penalized through civil money fines of $7,000.
Between 1st Rate Mortgage Corp and Access Mortgage Corporation a total of $27,000 in money penalties will be imposed by the MRB. Each lender will have the opportunity to seek a hearing before an Administrative Law Judge in order to challenge the imposition of civil money penalties.
David Stevens, FHA commissioner, said, “There should be no doubt about the message we’re sending to our lenders. FHA standards are there for a reason and we expect our lenders to follow them or pay the consequences. In today’s housing market, it is especially important that we work to reduce risk while being true to FHA’s mission to promote sustainable homeownership.”
In addition to inflicting penalties on these two lenders, the MRB reached tentative settlements with four other lenders and issued two letters of reprimand to lenders who violated FHA requirements, according to HUD.

Headquartered in California, Nations Direct Mortgage, LLC is a non-supervised direct endorsement mortgagee. According to HUD the company used the official HUD seal in a contract posted to its website, resulting in $3,500 in civil money penalties that Nations Direct has offered to pay.

VanDyk Mortgage Corporations, a non-supervised direct endorsement mortgagee based in Michigan, faced accusations from HUD of violating HUD/FHA requirements by failing to properly document a borrower’s income and failing to ensure than an employee did not participate in the origination of her own insured mortgage. The company agreed to pay $7,500 and assured the department against losses in the two loans at issue.
US Bank, NA, located in Minnesota, is a supervised federal savings bank and a GNMA issuer. According to HUD, US Bank violated HUD/FHA requirements in the submission of documentation necessary for the department to process a claim on a multifamily insured property. By failing to provide necessary documentation, HUD claims the bank delayed the re-sale of the foreclosed property and the department’s mitigation of the FHA fund’s losses in connection with the claim. US Bank has agreed to settle these allegations and made an administrative payment of $37,500.
Sun West Mortgage Company, Inc. is a non-supervised loan correspondent headquartered in California who allegedly originated 10 HECM loans in Masachusetts before receiving the necessary license and approval to originate these loans in another state. Additionally, the company failed to notify HUD that Massachusetts has issued a cease and desist order prohibiting it from unlicensed origination of loans in that jurisdiction. To resolve these allegations, Sun West Mortgage accepted a letter of reprimand and paid a civil money penalty of $10,000.
The second letter of reprimand was issued to Community Lender, Inc. an Idaho based lender facing claims of failing to notify HUD of losing its license in the State of Idaho. This letter was deemed appropriate because the revocation of the Idaho license occurred as a result of the lapsing of its Surety Bond for a two week period, an issue immediately corrected by the lender.