Over 70 FHA lenders fined by HUD in 2023

The Department of Housing and Urban Development's mortgagee review board took administrative actions against more than 70 FHA-approved mortgage lenders in fiscal year 2023, documentation shows.

Retail lenders, including Tomo Mortgage, Beeline Mortgage and Rocket Mortgage were fined for a number of infractions such as failing to maintain required minimum liquid assets, not filing financial statements with the Federal Housing Administration, submitting false certifications, or not reporting a sanction to the administration.

Moreover, the board decided some lenders such as Republic First Bank, Sprout Mortgage, and  WestStar Credit Union would be withdrawn from the program for one year because they were not in compliance with HUD's annual recertification requirements. 

Others including Ameritrust Mortgage Corp., Essential Mortgage Partners, LLC, and ResMac, Inc., failed to meet requirements for annual recertification of FHA approval but came into compliance. These entities paid fines ranging from $5,000 to almost $12,000.

None of the 88 instances outlined by HUD "constitute admissions of liability or fault," a document filed with the Federal Register said. 

The notice outlines actions taken by the board in its meeting from Oct. 1, 2022 to Sept. 30, 2023 where settlement agreements have been reached and civil money penalties were imposed. The notice also includes actions from prior fiscal years which have not previously been published, HUD said. The story was first reported by Inside Mortgage Finance.

In 2022, 65 mortgage lenders had fines levied against them, while in the year prior, 98 lenders settled with HUD.

Regarding Beeline Loans, HUD's mortgagee board entered into a $5,000 settlement agreement with the lender for failing to maintain the required minimum liquid assets in fiscal year 2021.

Meanwhile, Connecticut-based fintech Tomo Mortgage paid a $15,000 penalty on April 18, 2023 to settle claims that the mortgage lender failed to notify FHA in a timely manner of operating losses exceeding 20% of its network in FY 2022 and for failing to file quarterly financial statements following the reported loss. 

Hometown Equity Mortgage, Mortgage Network, among others, also opted to settle claims lodged against them for failing to timely notify FHA of sanctions in fiscal year 2022. Both of the mentioned lenders paid a $5,000 money penalty to HUD.

Lenders are required to notify the FHA of any notices of material events "which include things such as sanctions and unresolved findings received from state, local, or other entities with jurisdiction over the lender, within 10 business days," a HUD press person wrote Friday.

On Q, a mortgage lender that recently was impacted by a data breach, agreed to pay the department over $15,000 for failing to timely notify FHA of a state sanction in its fiscal year 2021. That same fiscal year it also submitted a false certification to the administration.

Mega lender Rocket Mortgage dolled out $17,864 on June 21, 2023 for failing to timely notify the FHA that it was sanctioned in FY 2021 and for submitting a false certification to FHA.

It is unclear why certain lenders paid more for similar infractions. HUD did not immediately respond to a request for comment.