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And it ain’t Auld Lang Syne. The Department of Justice (DOJ) isn’t quite finished yet. They recently settled with Troy, Michigan lender United Shore Financial Services (USFS) to the tune of $48 million. This may be music to their ears, but surely not to United Shore’s.
It is important to note that this settlement was the result of an investigation into USFS’s FHA originations between 2006 and 2011. They found that USFS failed to comply with FHA’s origination, underwriting and quality control requirements.
In doing so, they created a substantial loss for the FHA fund and put numerous Wisconsin homeowners at serious risk of losing their homes and ruining their credit.
DOJ found that USFS pressured their underwriters to approve loans and tied their compensation to a percent of the loans they approved. That’s a no-no. They also falsely certified that appraisal reviews were done by DE Underwriters. They weren’t!
To make matters worse, it was found that USFS did not provide senior management with meaningful QC information and did not meet FHA’s self-reporting requirements. DOJ found hundreds of loans with material defects, yet USFS had only reported three to FHA.
Once again, we find that quality and compliance are just as important as production and profits. USFS originated and closed the loans to generate profits but now must pay the price for their failure to follow the rules. A $48 million fine sure eats up quite a bit of profit. In addition, they now have a mark against them.
Make a New Year resolution to not overlook quality and compliance. Train staff to do things the right way for all the right reasons.
Quality Control is meant to ensure just that. If you’re not taking it seriously, you may find yourself on the wrong end of a DOJ action.
