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Once again we find the Department of Justice out to protect the “…housing market the FHA fund…,” according to Benjamin Mizer, the principal deputy assistant Attorney General. This time, they’re after Guild Mortgage, a San Diego lender with over five decades in the mortgage lending and servicing business. Another big target.
However, Guild is not a large bank but an Independent Mortgage Banker; one that has been participating in the FHA program for quite some time. One of the largest independent mortgage banking companies in the U.S. that originated $13.8 billion in loans in 2015. It has 234 branch and satellite offices in 25 states. No small potato.
The allegations are the same. That Guild submitted hundreds of improperly originated and underwritten loans to FHA between 2006 to 2011. Mary Anne McGarry, President, and CEO of Guild, refutes the claims. She says the mere fact that an FHA loan defaults is not some justification of any wrongdoing on the part of the lender.
This is another sad story to play out in the courts. Maybe. Or, will Guild be forced, or decide, to settle with DOJ, like most others, to avoid a long drawn out, and expensive, battle. If so, the saga will continue without much definitive resolution. Lenders get targeted by DOJ, allegations are made, lenders settle to get it over with quickly and as cheaply as possible.
Who’s next? Could be you! The loans originated today may become the basis for a DOJ claim or a HUD investigation tomorrow. Could you withstand a major lawsuit and fine?
FHA loans originated today must be fully compliant with all FHA rules, regulations, requirements and guidelines. A lender must sign an individual loan and annual certification that says so. Today, with many major banks pulling back, Independent Mortgage Lenders, like Guild, are more heavily involved in FHA loans. This is great for their business but it opens them up to these types of actions if these loans get into trouble.
Be smart. Take advantage of the opportunities presented, assist deserving and qualified consumers realize their dream of homeownership, and do so responsibly. Protect your income and your company. Ensure loans are done according to “Hoyle”. Play by the rules, avoid shortcuts, audit your loans and processes, train staff and correct problems and defects as soon as detected. Do not leave anything to chance.
An investment in compliance is an investment in quality. Both are a great investment in the continued success of a company. Are you positive that you and all your employees are playing by the FHA, and DOJ, rules? You better be…
