Do you know Helen Kanovsky? Hopefully not, because if you do, it may be that you ran afoul of HUD rules somewhere along the way.
Here’s a recent quote from Attorney Kanovsky,
“FHA-approved lenders are obligated to apply our underwriting standards, not only to protect our insurance fund but to make certain families can sustain their mortgages. Lenders who engage in business practices that do not conform to generally accepted standards or who act irresponsibly will not be tolerated”.
I believe she means business.
To back that up, HUD recently settled with two Texas lenders for FHA lending violations. Neither lender admitted any wrongdoing, but both paid and both lost their FHA lending approval (HUD Settlements). Do the crime, you pay the fine.
HUD review and enforcement actions continue. Unfortunately, some lenders think they can play fast and loose with the rules. It’s just a matter of time before they get caught; especially with the current “whistleblower” rules out there.
If a lender is circumventing the rules, there are employees in the organization that knows what’s going on. The more people who become aware, the harder it gets to keep things quiet and under control. Sooner or later, the dam is going to burst and the violations will be exposed. That’s when things get tough and violators pay the piper, as they should.
I wonder sometimes, why some people spend more time trying to “get around” the rules than it would take to comply. Maybe it’s just human nature, like kids trying to get away with something. To me, it doesn’t seem worth it in the long run. This is serious business. We didn’t handle risk very well last time around. If we falter again, there may be no recovery.
It’s time for all lenders to step up and do things right, for all the right reasons. Play by the rules, no matter how difficult they may be. Have systems and processes in place to quickly identify weaknesses and problems, so immediate corrective action can take place. Train employees on what needs to be done and how to do it. Monitor activities to ensure things are being done correctly.
Yes, there is a cost to doing things right, but there are also benefits. One big benefit is, not having to continually look over your shoulder watching out for the regulators. Investments in quality and compliance will pay big dividends if you plan on staying in business. If not, just go ahead and break the rules, you won’t be around for long, especially if HUD has anything to say about it.