HUD takes action on mortgage fraud

The Department of Housing and Urban Development recently suspended the president of Lend America, a former Federal Housing Administration-approved mortgage lender, after he pleaded guilty to mortgage fraud.

Housing Wire reported Michael Primeau diverted mortgage funds intended for paying off first mortgages at a refinance closing to pay for company operating expenses. HUD also discovered that two years ago Ideal Mortgage Bankers, which was working with Lend America, had violated FHA origination and underwriting requirements by submitting false certifications and inaccurate borrower documentation.

Primeau is no longer allowed to conduct business with HUD, and the FHA has retracted its approval of Ideal Mortgage Bankers. In addition, Ginne Mae's guaranteed mortgage bonds will no longer be issued from Lend America, and the agency has seized the lender's portfolio, the news source reported.

In regards to the annual actuarial review of FHA's Mutual Mortgage Insurance Fund, the secretary of HUD Shaun Donovan said the fund looks stable so long as a second recession does not hit the U.S. economy. Reverse Mortgage Daily reported that slower prepayment speeds are helping to strengthen the fund, however, home price projections could greatly affect the fund and a second recession could push the FHA into a negative capital situation, according to Donovan.

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