Magazine article Mortgage Banking

FHA Sanctions Cambridge Home Capital

Magazine article Mortgage Banking

FHA Sanctions Cambridge Home Capital

Article excerpt

On Dec. 13, the Federal Housing Administration (FHA) announced that Cambridge Home Capital LLC, Great Neck, New York, was being permanently stripped of its FHA lending authority. A monetary penalty of $182,000 also was being sought from the lender for what were deemed "gross violations" of FHA underwriting standards. The actions were authorized by FHA's Mortgagee Review Board (MRB).

In addition, the Department of Housing and Urban Development (HUD), along with HUD's Office of Inspector General (OIG), worked closely with the U.S. Attorney's Office in the Southern District of New York to bring related civil fraud charges against the lender, according to HUD.

"The serious and egregious violations we discovered require strong action in order to protect the best interests of FHA and the public," said FHA Commissioner David H. Stevens. He added, "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."

HUD's press release noted that the MRB acted based on the lender's "numerous and egregious violations of FHA requirements." Some of the specified violations included failure to maintain and implement a required quality control plan; failure to document the stability and/or source of the borrower's income; approving loans with grossly excessive debt-to-income ratios without other compensating factors; and using conflicting information in originating and obtaining FHA insurance. …

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