We would like to hear your opinion on this in our comments. What do you think about this?Preet Bharara, the U.S. Attorney for the Southern District of New York, has announced that the United States has settled a civil mortgage fraud lawsuit against Golden First Mortgage Corp. and its Owner, Operator and President, David Movtady. The government’s complaint, filed in April 2013, and amended in August 2013, sought damages and civil penalties under the False Claims Act for years of misconduct in connection with Golden First’s participation in the Federal Housing Administration’s (FHA) Direct Endorsement Lender Program. In the settlement approved in Manhattan federal court by U.S. District Judge Jesse Furman, Movtady and Golden First admitted, acknowledged, and accepted responsibility for conduct alleged in the Amended Complaint, specifically that they failed to maintain a compliant quality control program and therefore did not conform to all U.S. Department of Housing & Urban Development (HUD) and FHA regulations applicable to the Direct Endorsement Lender Program. This conduct was contrary to the representations in Golden First’s annual certification, including the annual certification signed by Movtady on Sept. 15, 2008. The defendants also agreed to a $36 million judgment against Golden First and a $300,000 payment from Movtady. Finally, the settlement permanently bars Movtady from conducting any business with the federal government.
“This settlement holds Golden First and its owner, David Movtady, accountable for lying to the Government about compliance with HUD requirements and approving bad loans,” said Bharara. “This type of conduct costs the United States millions of dollars when the loans inevitably default, and this Office is committed to snuffing it out.”
According to the allegations contained in the Complaint, the Amended Complaint, and other public court filings:
Golden First was a participant in the Direct Endorsement Lender program—a federal program administered by FHA—from 1989 until 2010. Movtady was the owner, president and operator of Golden First from 1979 until 2010. As a Direct Endorsement Lender, Golden First had the authority to originate, underwrite, and certify mortgages for FHA insurance. If a Direct Endorsement Lender approves a mortgage loan for FHA insurance and the loan later defaults, the holder of the loan may submit an insurance claim to HUD for the costs associated with the defaulted loan, which HUD must then pay. Under the Direct Endorsement Lender program, HUD relies on lenders to properly review, underwrite, and certify loans before they are endorsed for FHA insurance. Direct Endorsement Lenders are therefore required to follow HUD’s program rules, including certifying mortgages and maintaining a quality control program that can prevent and correct any deficiencies in their underwriting. The quality control program requirements include maintaining a program independent of the lender’s business units; disclosing to HUD, within 60 days of initial discovery, all loans containing evidence of fraud or other serious underwriting problems; and conducting a full review of all loans that go into default within the first six payments (“early payment defaults”). Golden First and Movtady failed to comply with all three of these basic requirements. Notwithstanding these failures, Movtady fraudulently certified that Golden First “conforms to all HUD-FHA regulations necessary to maintain its HUD-FHA approval.”
Golden First and Movtady also engaged in a regular practice of originating and underwriting FHA loans that Golden First and Movtady knew should have never been approved. Nonetheless, Golden First certified that more than a thousand FHA loans met HUD’s requirements and therefore were eligible for FHA insurance.
Pursuant to the settlement, the United States will obtain a $36 million judgment against Golden First and recover $300,000 from Movtady, individually, within six months of the settlement. Movtady will also be permanently barred from conducting any business with the federal government. As part of the settlement, the defendants admitted, acknowledged, and accepted responsibility for the following misconduct:
?Golden First failed to conform fully to HUD-FHA rules requiring Direct Endorsement Lenders to maintain a compliant quality control program;
?Contrary to representations in Golden First’s annual certifications, including an annual certification signed by Movtady on Sept. 15, 2008, Golden First did not conform to all applicable HUD-FHA regulations;
?Golden First endorsed certain loans for FHA mortgage insurance that did not meet all underwriting requirements contained in HUD’s handbooks and mortgagee letters, and therefore were not eligible for FHA mortgage insurance under the DEL program; and
?Golden First submitted to HUD-FHA certifications stating that certain loans were eligible for FHA mortgage insurance when in fact they were not; FHA insured certain loans endorsed by Golden First that were not eligible for FHA mortgage insurance; and HUD consequently incurred losses when some of those loans defaulted.
With Friday's increases, Mortgages Rates moved to the edge of their recently long and stable stay at a 3.875% Best-Execution level. While some lenders are still best-priced at 4.0%, the average Best-Execution rate moved back down into 3.875% territory today. Keep in mind that "best-execution" refers to the most ideal possible rate/fee scenario and we track this because it's the most consistent way to benchmark the movement of the broader collection of lender rate offerings.
The same thing that has been moving markets and mortgage rates around all week, is once again behind today's general bounce back. Early this morning, one of the leaders of a political party in Greece said that his party could not back the bailout agreement. The execution of this agreement was a key factor pressuring rates higher in general and it required the approval of all three of Greece's political parties. If constant drama surrounding Greece is starting to feel repetitious to you, you're not alone. There is yet another "important day on the calendar" next Wednesday, where Euro-zone ministers will meet again to approve the bailout package if Greece can get its ducks in a row by then.
This is a positive development for the long term trend in mortgage rates as it essentially constitutes a "bounce" against a ceiling at the upper limits of 3.875% best-execution territory. In other words, if rates had gone any higher today, we'd have been decidedly in 4.0% territory. 3.875% is the lowest that best-execution has stably been.