Following investigations by HUD and other agencies, the FHA’s Mortgage Review Board (MRB) is sending a message to non-compliant lenders by permanently withdrawing FHA approval of Cambridge Home Capital (CHC). In addition, the MRB will seek a monetary penalty of $182,000.
According to HUD, the Great Neck, NY lender committed “numerous and egregious violations of FHA requirements,” including: failure to maintain and implement a required Quality Control Plan; failure to document the stability and/or source of borrowers’ income, approving loans with grossly excessive debt-to-income ratios without compensating factors to justify approval; and using conflicting information in originating and obtaining FHA mortgage insurance.
“The violations we discovered require strong action in order to protect the best interests of FHA and the public,” said FHA Commissioner David H. Stevens. “FHA’s underwriting standards are there for a reason–to ensure sustainable homeownership for borrowers and to protect the financial health of the insurance fund so we can continue to meet our public mission.”
CHC may appeal FHA’s withdrawal by submitting a written request for a hearing before an administrative law judge within 30 days. But even if an appeal is filed, the withdrawal of FHA approval takes effect immediately. CHC will also have the opportunity to contest the $182,000 in monetary penalties.