HUD Cracks Down on FHA Fraudby Tim Manni
HUD has made good on their promise to investigate and crack down upon the fraud permeating through the FHA loan market. Yesterday, HUD announced sanctions against more than 120 FHA-approved lenders.
Click here for the complete list of sanctioned lenders and their violations.
In early April we documented the rapid rise in “zero pay” defaults in the FHA market:
National Mortgage News said, “The trend, which Lisa Gore, the assistant special agent in charge of the criminal investigation division in HUD’s Inspector General’s office, called ‘a huge red flag’ that some type of fraud has been committed, is similar to the one experienced in the 1999-2001 housing market downturn.”
HUD responded by sending “swat teams” unannounced to check in on problem lenders. The strategy seems to have worked.
On Thursday, HUD Secretary Shaun Donovan said, “At this time of uncertainty in the mortgage market, FHA needs to be especially vigilant in making sure that its approved lenders meet the highest standards of conduct. We expect, and more importantly American homebuyers deserve, that when they deal with an FHA-approved lender, they’re dealing with a lender they can trust. The provisions in the Helping Families Save Their Homes Act will expand our enforcement and help keep bad actors out of our program.”