Lakeway mortgage lender one of 15 in FHA crackdown
Posted January 17th, 2010 by guy3
Austin American Statesman
By Alan Zibel ASSOCIATED PRESS
Published: 9:25 p.m. Tuesday, Jan. 12, 2010
WASHINGTON — Federal housing officials served subpoenas Tuesday on 15 mortgage companies, including one in Lakeway, that had suspiciously high default rates for loans backed by the Federal Housing Administration. The actions are part of a broad crackdown on dubious lenders as the agency tries to stem losses.
After the housing market went bust, the FHA became the major source of funding for first-time homebuyers. But the agency, which insures about 30 percent of new loans, has seen its losses rise dramatically. Although the agency has avoided a taxpayer rescue so far, its reserves have sunk below the minimum level required by Congress.
There also have been fears that subprime lenders have shifted their business to the FHA after the subprime business went bust.
The agency has already taken action against several problem lenders. One of the nation's biggest mortgage bankers, Taylor, Bean & Whitaker Mortgage Co. of Ocala, Fla., was banned from the FHA program in August and filed for Chapter 11 bankruptcy protection. Another mortgage company, Lend America, was kicked out in November.
On Tuesday, the Department of Housing and Urban Development's inspector general, Kenneth Donohue, said he wanted to determine why defaults are so high among the 15 companies and whether any have committed fraud.
"Many of these target loans didn't last but a short time before defaulting," Donohue said. "We will conduct an investigation, if appropriate, to determine who is responsible and will recommend that appropriate action be taken against individuals and corporations."
The FHA does not make loans but rather offers insurance against default. Borrowers are willing to pay for the insurance because FHA loans require down payments of only 3.5 percent of the purchase price.
The lenders targeted by FHA officials include some of its worst-performing active lenders. For example, almost one in five loans made by Alethes LLC of Lakeway over the past two years went into default, compared with a national average of about 5 percent.
For more on this article go to:
http://www.statesman.com/business/real-estate/lakeway-mortgage-lender-on...
