HUD takes action againts Reverse Mortgage Lender in Hawaii

The U.S. Department of Housing and Urban Development today announced that its Mortgagee Review Board ( MRB ) is proposing to permanently withdraw the HUD/FHA approval of Financial Mortgage USA, Inc., a Home Equity Conversion Mortgage ( HECM or reverse mortgage ) lender based in Honolulu, Hawaii. HUD’s MRB alleges the Company failed to implement an FHA-required quality control plan; separate its lending operations from those of its affiliated insurance company; conform to prudent lending practices; and properly provide borrowers with housing counseling services.

Financial Mortgage USA ( FMUSA ) has 30 days to respond to the Board’s proposed withdrawal and seek a hearing before an Administrative Law Judge.

In addition, the MRB is imposing the maximum $97,500 civil money penalty available against the Company for these violations. A complaint seeking these civil money penalties will be served upon Financial Mortgage USA in due course and the lender will have 15 days to request a hearing on the imposition of these civil money penalties.

“FHA will not tolerate lenders who violate our rules and prey on those who depend on a reverse mortgage to continue to live independently,” said FHA Commissioner David Stevens. “FHA-approved lenders must understand that we mean business when it comes to protecting the FHA insurance fund from those who cut corners and take advantage of unsuspecting senior citizens.”

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