Beleaguered lender National City Mortgage must pay $4.6 million in fines to HUD for falsely certifying home loans for FHA insurance under the FHA”s “late endorsement loan” provision. The provision allows direct endorsement FHA lenders to endorse loans for FHA insurance after 60 days from the closing.
A loan is eligible for the late endorsement if the lender certifies that the borrower has not been delinquent between the time the loan was closed and the date of the insurance endorsement request.
National City submitted 58 loans for late endorsement that were falsely certified.
From the press release on the fine:
"Department of Housing and Urban Development regulations require that the lender make certain certifications to the Federal Housing Administration (FHA) when it is submitting loans for insurance coverage more than 60 days from the loan closing, referred to as “late endorsement loans.” One such certification and requirement is that the loan payment is not more than 30 days past due when submitted for FHA insurance coverage. The government alleges that National City improperly submitted 58 late endorsement loans for FHA insurance coverage that were not current, in violation of FHA regulations.
“This settlement shows this district’s serious commitment to stamping out fraud and maintaining the integrity of the federally insured mortgage program,” said Stephen J. Murphy, U.S. Attorney for the Eastern District of Michigan. “This office will continue to use all tools available to it, including civil enforcement, to protect all government programs and the people who benefit from them.”
Source: By Blown Up Mortgage - http://blownmortgage.com/
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