August 2, 2011 (Jeff Alan)

The Federal Housing Administration’s (FHA) Mortgage Review Board (MRB) has taken administrative action against 240 FHA-approved lenders who failed to meet its lending requirements.

Since 2009, the MRB has taken more than 2,300 administrative actions against lenders including 1,600 last year. Sanctions can include reprimands, probations, suspensions, withdrawals of approval, and civil money penalties.

In the latest round of actions, 26 lenders faced the most severe penalties for misconduct including Settlement Agreements, Civil Money Penalties, Withdrawals of FHA approval, Suspensions, Probations, Reprimands, and Administrative Payments.

Lenders faced penalties of between $7,500 and $237,500, suspensions of up to one to five years and restitution for their grievances. Alacrity Lending Company of Southlake, TX faced the largest penalty of $237,500 and a three year suspension. Seven of the 26 lenders were permanently banned from participating in the FHA’s programs.

The MRB withdrew HUD/FHA approval for 123 lenders who failed to meet the requirements for annual recertification requirements.

The MRB also gave 91 lenders who had previously failed to meet the annual recertification the opportunity to settle, requiring monetary penalties of $1,000, $3,500 or $7,500.

The FHA has instituted a number of new rules designed to strengthen risk management including increasing net worth requirements of FHA-approved lenders, strengthening lender approval criteria, and making lenders liable for the oversight of mortgage brokers.

“It’s never been more important that lenders doing business with FHA apply our standards to each and every loan they originate and underwrite,” said Acting FHA Commissioner Carol Galante. “FHA requirements ensure homeowners are put on a path of sustainable homeownership and that ultimately helps stabilize entire neighborhoods and communities.”

Tags: HUD, FHA, mortgage review board, FHA-approved lenders, lending requirements, sanctions, penalties