Loan Modification

FHA Lenders Getting Bounced

By Gina Pogol

This week’s news contained several news items in which FHA banned certain lenders from participating it its programs.  In addition, other lenders were allowed to continue doing FHA business but were fined or otherwise sanctioned by the agency.  Want to know what kind of actions get lenders fined or banned, and how it affects you?

Atlanta-based RSA Financial has been permanently enjoined from FHA lending and has been fined $15,000 for misleading the agency about the status of its Georgia license (it didn’t have one!), as well as the criminal conviction and sanction history of its owner and executive, Ramsey Suphi Agan.

That’s great, except for one thing — the company was able to do business with plenty of unsuspecting borrowers before being caught and bounced. It was incorporated in 2008 and not stopped until April 2010.

Franklin First Financial, Ltd, is another lender in hot water with HUD. It’s still in business but got into trouble for, among other violations, charging 78 borrowers for duplicate appraisals and appraisal reviews. It paid a $413,500 fine and has continued write mortgages. But the fact remains — the only reason the lender reimbursed the overcharged customers is that it was caught in the act and forced to. Would you want to work with a lender that does business this way? Don’t think so.

HUD is not your Mom. You need to protect yourself. If an unlicensed lender run by a convicted felon managed to get past FHA’s quality control, you can’t rely on the agency to pick your next lender. But you CAN check the company’s licensing status with your state’s financial institutions or real estate division as well as HUD’s lender search. You can avoid lenders that contact you by phone or email with no request from you.  And you can shop with several so you know a good deal when you see it.

Full post as published by FHA Mortgage Guide on April 04, 2010 (boomark / email).