As if we needed any more signs that compliance is king and that doing it the right way is the only way.....

 FHA Cracks Down on Four Lenders

January 25, 2010

The Department of Housing and Urban Development has stopped three lenders from originating Federal Housing Administration loans and suspended another as part of a continuing effort to weed out lenders that don't adhere to FHA rules and policies. The HUD Mortgagee Review Board permanently withdrew FHA approval from Strategic Mortgage Corp., Oklahoma City, ProMortgage Inc., Claremore, Okla., and Americare Investment Group Inc., Arlington, Texas. FHA also suspended Home Mortgage Inc., of Burr Ridge, Ill., for six months. Strategic Mortgage had a 14.7% early default and claim rate and FHA said it charged borrowers impermissible or excessive fees and submitted a false certification to HUD. The MRB also levied a $71,000 civil money penalty against the Oklahoma City company. ProMortgage had a 7.3% early default and claim rate and HUD said it failed to comply with numerous FHA requirements such as reviews of early defaulted loans, verifying borrower income and reporting employee compensation on appropriate forms. The MRB levied a $124,000 CMP against the firm. HUD terminated Americare for failing to make monthly payments on a settlement involving a $124,000 civil money penalty.

credit:  Source Media - Daily Origination News  Jan. 25th, 2010

To me, this says HUD remains serious about cleaning up the bad apples.  I couldn't be happier - as a bank loan officer who often sees flagrant violations of HUD's FHA requirements.  As HUD continues to clean house, the mortgage community as a whole benefits, from consumers to realtors, to originators and lenders. 

While the last 2 years has been a dramatic reversal in fortunes for many in our profession, the long-term rewards of this shakeout will help the professionals who remain.