AUDIT REPORT
MORTGAGE AMERICA BANKERS, LLC,
A NON-SUPERVISED LOAN CORRESPONDENT
KENSINGTON, MD
2004-PH-1012
September 10, 2004
OFFICE OF AUDIT, MID-ATLANTIC
PHILADELPHIA, PA
Issue Date
September 10, 2004
Audit Case Number
2004-PH-1012
TO: John C. Weicher, Assistant Secretary for Housing-Federal Housing Commissioner, H
FROM: Daniel G. Temme, Regional Inspector General for Audit, Mid-Atlantic, 3AGA
SUBJECT: Mortgage America Bankers, LLC, a Non-Supervised Loan Correspondent
Kensington, Maryland
We completed an audit of Mortgage America Bankers, limited liability company (LLC). We
selected Mortgage America Bankers, LLC for review because of its high default rates. The
objectives of our review were to determine whether Mortgage America Bankers, LLC, complied
with HUD mortgagee approval requirements; complied with HUD regulations, procedures, and
instructions in originating Federal Housing Administration (FHA)-insured loans selected for
review; and Mortgage America Bankers, LLC’s quality control plan is implemented according to
U.S. Department of Housing and Urban Development (HUD) regulations. This report contains
three findings and applicable recommendations requiring action by your office.
In accordance with HUD Handbook 2000.06, REV-3, within 60 days, please provide us for each
recommendation without a management decision, a status report on 1) the corrective action taken, 2)
the proposed corrective action and the date to be completed, or 3) why action is considered
unnecessary. Additional status reports are required at 90 days and 110 days after the report is issued
for any recommendation without a management decision. Also, please furnish us copies of any
correspondence or directives issued because of the audit.
We appreciate the courtesies and assistance extended by the management and staff of Mortgage
America Bankers, LLC, and the HUD Philadelphia Homeownership Center.
Should you or your staff have any questions, please contact Ms. Christine Begola, Assistant
Regional Inspector General for Audit, at (410) 962-2520.
Management Memorandum
THIS PAGE LEFT
BLANK
INTENTIONALLY
2004-PH-1012 Page ii
Executive Summary
We completed a review of Mortgage America Bankers, LLC (Mortgage America), an FHA-
approved non-supervised loan correspondent whose main office is located in Kensington, Maryland.
The objectives of our audit were to determine whether Mortgage America complied with HUD
mortgagee approval requirements; complied with HUD regulations, procedures, and instructions
in originating FHA-insured loans selected for review; and Mortgage America’s quality control
plan was developed and implemented according to HUD regulations.
We found that Mortgage America’s office operations did not comply with HUD/FHA mortgagee
approval requirements, failed to justify loan overages and premium rate mortgages, and did not
adequately develop and implement a quality control plan that meets HUD requirements. As a result,
Mortgage America received $61,138 in ineligible fees and $27,718 in unsupported fees. In
addition, it originated $2,983,501 in questioned loans. The results of our review are summarized
below and detailed in the finding sections of this report.
Mortgage America Did Mortgage America did not administer its mortgagee office
Not Comply With HUD’s operations in conformity with HUD/FHA approval
Mortgagee Approval requirements as discussed in HUD Handbook 4060.1,
Requirements REV-1. It originated loans from unauthorized offices and
by non-Mortgage America employees, did not require
exclusivity of its employees, and did not exercise control
and supervision over its employees. In addition, it did not
pay all of its employees’ operating expenses. In our
opinion, these deficiencies are a result of either Mortgage
America’s disregard for or lack of knowledge of
HUD/FHA mortgagee approval requirements. Due to these
compliance weaknesses, Mortgage America’s eligibility as
a HUD/FHA-approved mortgagee is questionable.
Mortgage America Could Mortgage America did not comply with HUD/FHA’s loan
Not Justify Loan Discount origination regulations. It failed to justify loan overages (loan
Fees And Premium Rate discount fees) charged to 13 borrowers; provided premium
Mortgages Charged To rate mortgages without reducing the borrower’s closing costs
Borrowers (yield spread premiums) in 14 loans; and charged a real estate
commission fee to one borrower when a financial interest
existed between the real estate agent and Mortgage America.
In our opinion, these deficiencies are a result of Mortgage
America’s disregard for or lack of understanding of
HUD/FHA loan origination requirements. In addition,
Mortgage America did not adequately supervise its
branches and employees. Consequently, FHA loans
originated by Mortgage America had unnecessarily higher
mortgage payments, resulting in an increased risk to the
FHA insurance fund.
Page iii 2004-PH-1012
Executive Summary
Mortgage America’s Mortgage America did not adequately develop and
Quality Control Process implement a quality control plan that fully meets HUD
Was Not Adequate requirements as outlined in HUD Handbook 4060.1, REV-
1, chapter 6. It failed to conduct the required quality
control reviews or maintain its loan origination case files
for the required 2-year period. The deficiencies associated
with Mortgage America’s quality control plan and
procedures stem from either its disregard for or lack of
knowledge of HUD’s and its own quality control
requirements. Therefore, Mortgage America is unable to
guarantee the accuracy, validity, and completeness of its
loan origination operations.
Recommendations We recommend that HUD require Mortgage America to take
immediate action to correct its ongoing operational
deficiencies that do not comply with HUD/FHA mortgagee
approval requirements. We also recommend that HUD
require Mortgage America to establish policies and
procedures to ensure that loans originated by its main and
branch offices comply with HUD/FHA loan origination
requirements. Further, we recommend that HUD take
appropriate steps to ensure that Mortgage America takes
immediate action to implement a quality control plan that
meets all HUD requirements and consider taking appropriate
administrative action against Mortgage America for its
continual failure to comply with HUD requirements.
Auditee Comments We provided our initial draft of this report to Mortgage
America on June 25, 2004. We discussed the findings and
recommendations with Mortgage America at an exit
conference on July 8, 2004. Mortgage America provided
written comments to the draft on July 22, 2004. Mortgage
America’s response consisted of a six-page letter and three
attachments. The complete text of the letter is included in
Appendix G. We did not include the attachments because
they contained clients’ personal loan information not
available for public distribution.
2004-PH-1012 Page iv
Table of Contents
Management Memorandum i
Executive Summary iii
Introduction 1
Findings
1. Mortgage America Did Not Comply With HUD’s 3
Mortgagee Approval Requirements
2. Mortgage America Could Not Justify Loan Discount Fees 11
and Premium Rate Mortgages Charged to Borrowers
3. Mortgage America’s Quality Control Process 17
Continues to Be Inadequate
Management Controls 21
Follow Up On Prior Audits 23
Page v 2004-PH-1012
Table of Contents
Appendices
A. Schedule of Questioned Costs and Funds to Be Put to 25
Better Use
B. Twenty-Two FHA-Insured Loans Selected for Review 27
C. Loan Originations at Unauthorized Offices 29
D. Loans Originated by Non-Mortgage America Employees 31
E. Loans Originated by Marlow Heights/Camp Springs 33
Offices
F. Chart of Unearned and Unallowable Fees 35
G. Auditee Comments 37
2004-PH-1012 Page vi
Introduction
The U.S. Department of Housing and Urban Development (HUD) insures mortgages made by
private lending institutions under Section 203 of the National Housing Act. HUD designates
these institutions as supervised mortgagees, non-supervised mortgagees, loan correspondents,
investing mortgagees, and government institutions. Depending upon their designation, the
institutions have the authority to originate, purchase, hold, service, or sell FHA-insured
mortgages. A loan correspondent can only originate loans for an approved sponsor.
Mortgage America Bankers, LLC (Mortgage America) formed a limited liability company on
May 6, 1996 under the laws of the state of Maryland. On December 4, 1998, HUD authorized
Mortgage America as a non-supervised loan correspondent mortgagee. Mortgage America’s
main office is located at 3930 Knowles Avenue, Suite 305, Kensington, MD 20895.
As a non-supervised loan correspondent, Mortgage America’s principal activity is the origination of
mortgages for sale or transfer to an approved FHA sponsor under the HUD Single Family Direct
Endorsement Program. The sponsor is responsible to HUD for the actions of its loan correspondent
in originating insured mortgages. The sponsor underwrites the loans originated by the loan
correspondent and is required to supervise and perform quality control reviews of its loan
correspondents. The sponsor must be an approved mortgagee that is also authorized to participate in
the HUD Single Family Direct Endorsement Program.
From September 1, 2001, through August 31, 2003, Mortgage America originated 146 FHA-insured
loans totaling approximately $20 million. As of October 3, 2003, 14 of these loans (10 percent)
have gone into default status at least once (see Appendix B). As of March 31, 2004, foreclosure
action had been initiated on 8 of the 14 defaulting loans at least once during the life of the loan.
Four of the eight loans have been conveyed to HUD with claims paid totaling $531,906 (see
Appendix C). As of March 31, 2004, none of these four properties had been re-sold.
HUD’s Quality Assurance Division performed a Title II monitoring review of Mortgage America in
November 2001. The findings letter, prepared by the Quality Assurance Division, disclosed that
Mortgage America’s quality control plan failed to contain all elements required by HUD, and
Mortgage America failed to implement its quality control plan in accordance with HUD guidelines
and standards. It was not able to provide HUD with any quality control reports.
Audit Objectives Our audit objectives were to determine whether Mortgage
America complied with HUD mortgagee approval
requirements; complied with HUD regulations, procedures,
and instructions in originating FHA-insured loans selected
for review; and to determine whether Mortgage America’s
quality control plan was developed and implemented
according to HUD regulations.
Page 1 2004-PH-1012
Introduction
Audit Scope And To accomplish the audit objectives, we:
Methodology
• Reviewed 100 percent of the FHA-insured loans (14 case
files) originated by Mortgage America that had gone into
early default at least once as of October 3, 2003. The 14
loans reviewed were from the universe of 146 loans
originated by Mortgage America with beginning
amortization dates for the 2-year period from September
1, 2001, to August 31, 2003. The results of the detailed
testing apply only to the 14 FHA-insured loans selected
and cannot be projected to the universe of 146 FHA-
insured loans.
• Selected and reviewed an additional eight FHA-insured
loans originated by Mortgage America with closing dates
between July 1, 2003, to September 30, 2003 due to
Mortgage America’s current non-compliance with
HUD/FHA guidelines (see Appendix B).
• Examined records and related documents of Mortgage
America.
• Reviewed applicable HUD records relating to Mortgage
America’s non-supervised loan correspondent activities.
• Conducted interviews with officials and employees of
Mortgage America and the HUD Quality Assurance
Division.
In addition, we relied, in part, on data maintained by HUD
in the Single Family Data Warehouse and Neighborhood
Watch. We did not perform a detailed analysis of the
reliability of HUD’s Single Family Data Warehouse or
Neighborhood Watch data.
Our audit generally covered the period of September 1,
2001, through August 31, 2003. Where applicable, the
audit period was expanded to include current data through
March 31, 2004. We conducted our fieldwork from
October 2003 through May 2004.
Our review was conducted in accordance with Generally
Accepted Government Auditing Standards.
2004-PH-1012 Page 2
Finding 1
Mortgage America Did Not Comply With
HUD’s Mortgagee Approval Requirements
Mortgage America did not administer its mortgagee office operations in conformity with
HUD/FHA approval requirements as discussed in HUD Handbook 4060.1, REV-1. It originated
loans from unauthorized offices and by non-Mortgage America employees, did not require
exclusivity of its employees, and did not exercise control and supervision over its employees. In
addition, Mortgage America did not pay all of its employees’ operating expenses. These
deficiencies and others noted below are a result of either Mortgage America’s disregard for or
lack of knowledge of HUD/FHA mortgagee approval requirements. Due to these compliance
weaknesses, Mortgage America’s eligibility as a HUD/FHA-approved mortgagee is
questionable.
Mortgage America Contrary to HUD requirements, we found Mortgage
Originated HUD/FHA- America was originating, processing and submitting FHA
Insured Mortgages From loans for endorsement from three locations that had not
Offices Not Approved By been approved by HUD. These locations included:
HUD
1. 3930 Knowles Avenue, Suite 305, Kensington, MD
(Main Office)
2. 3006 St. Clair Drive, Marlow Heights, MD (Marlow
Heights/Camp Springs)1
3. 1738 Elton Road, Silver Spring, MD
HUD Handbook 4060.1, REV-1, paragraph 1-2, General,
states a mortgagee must be approved by HUD to originate,
purchase, hold, or sell HUD/FHA-insured mortgages. In
addition, subparagraph A states that for each branch office
from which the mortgagee will submit mortgages for
insurance, a Branch Office Notification Form and
application fee must be submitted to the HUD field office
in the jurisdiction in which the branch office is located.
Further, according to Mortgagee Letter 2000-15, the
origination of insured mortgages by lenders that have not
received HUD/FHA approval increases the risk to the FHA
1
The Marlow Heights office was formed in July or August 2002 after a previous branch located at 5625 Allentown
Road, Camp Springs, MD, was closed. Two of the Camp Springs loan officers remained employed with Mortgage
America and formed the Marlow Heights office. For purposes of this audit, we have grouped these branch offices
together (Marlow Heights/Camp Springs).
Page 3 2004-PH-1012
Finding 1
insurance funds and to the public. Mortgagees found to be
in violation may be subject to the full range of HUD
sanctions.
HUD records show the only Mortgage America office
approved by HUD to originate FHA mortgages is an office
located at 8555 16th Street, Suite 205, Silver Spring, MD.
However, our review found this location no longer
functions as a Mortgage America office; instead, it is
operated as a net branch of 1st Metropolitan Mortgage.
Mortgage America moved its main office from the Silver
Spring location to Kensington, MD in June or July 2003.
Of the 22 loans reviewed, Mortgage America originated 17
loans (77 percent) from unauthorized locations. Of these
17 loans, 15 loans were originated from the Marlow
Heights/Camp Springs offices. The remaining two loans
were originated from Mortgage America’s branch office on
Elton Road in Silver Spring.
Mortgage America’s loan origination from unauthorized
offices is a serious violation of HUD/FHA rules and
regulations. Mortgage America’s failure to register its
main and branch offices with HUD has increased the risk to
the FHA insurance fund and to the public. Four of the 17
loans originated from unauthorized offices have since been
conveyed to HUD. The claims paid by HUD on these loans
total $531,906 and should be paid back by Mortgage
America. The other 13 loans originated from unauthorized
offices have original mortgage amounts totaling $1,878,205
(see Appendix C). Due to the failure by Mortgage America
to properly register its offices, we are seeking
indemnification on these loans.
Mortgage America Did Contrary to HUD loan origination requirements, Mortgage
Not Originate And Close America did not originate and close all mortgages for
All HUD/FHA Loans In HUD/FHA insurance endorsement in their own name. Of
Their Own Name the 22 loans we reviewed, 4 loans totaling $573,390 were
originated and closed by 1st Metropolitan Mortgage
employees. Two of the four loans were originated and
closed in the name of 1st Metropolitan Mortgage; however,
Mortgage America’s lender identification number was used
to both originate and close these loans. In the other two
loans, employees of 1st Metropolitan Mortgage originated
2004-PH-1012 Page 4
Finding 1
and closed the loans in Mortgage America’s name (see
Appendix D). By allowing these four loans to be
originated by non-Mortgage America employees, Mortgage
America’s former General Manager violated HUD/FHA
requirements.
HUD Handbook 4060.1, REV-1, paragraph 2-25, Loan
Origination Requirement, requires that mortgagees
originate, close, fund, and submit mortgages for HUD/FHA
insurance endorsement in their own name. Paragraph 2-14,
Conducting Mortgagee Business, requires all employees,
except the receptionist, whether full-time or part-time, to be
employed exclusively by the mortgagee at all times.
Mortgage America’s former General Manager did not
comply with HUD’s loan origination requirements that all
loans originate and close in their own name. During the
transition of Mortgage America’s main office from Silver
Spring to Kensington, its General Manager stopped
functioning as the General Manager/Loan Officer for
Mortgage America. Instead, he, along with some former
Mortgage America loan officers, remained at the Silver
Spring office to operate as a net branch of 1st Metropolitan
Mortgage.
Senior Management Did HUD Handbook 4060.1, REV-1, paragraph 2-13, Control
Not Adequately Control and Supervision of Staff, requires a mortgagee to exercise
And Supervise Its control and responsible management supervision over its
Employees employees. The requirement regarding control and
supervision must include, at a minimum, regular and
ongoing reviews of employee performance and of work
performed.
Mortgage America’s management did not exercise control
and supervision over its employees and did not actively
participate in the loan origination process performed by its
loan officers and loan processors. The only review of the
loan officer’s and processor’s work that takes place is the
completion of a standard checklist to ensure that all the
necessary documents are present, signed, and dated. This
review does not verify the quality or validity of the
information provided in the loan file. Also, Mortgage
America was unable to provide any written reviews
regarding the loan officer’s performance or improvements
needed.
Page 5 2004-PH-1012
Finding 1
Mortgage America’s failure to exercise control and
responsible management over its employees prevents it
from ensuring that the origination operations of its
employees are in accordance with HUD/FHA practices.
Not All Employees Were HUD Handbook 4060.1, REV-1, paragraph 2-14,
Employed Exclusively By Conducting Mortgagee Business, requires all employees
Mortgage America At All except the receptionist, whether full-time or part-time, to be
Times employed exclusively by the mortgagee at all times.
Mortgage America did not enforce and require exclusivity
of its employees as required by HUD. Review of the loan
origination files documented that the branch manager of the
Marlow Heights office was also an agent for Murrell,
Incorporated, Realtors. Murrell, Incorporated, Realtors is
located next door to the Marlow Heights branch office. Of
the 22 loans we selected for review, 15 (68 percent) were
originated from the Marlow Heights/Camp Springs offices.
Murrell, Incorporated, Realtors was listed as the real estate
agent in 6 of these 15 loans. The Marlow Heights branch
manager acted as the real estate agent on two of these six
loans, while the other Marlow Heights loan officer
originated the loans (see Appendix E).
Mortgage America Does HUD Handbook 4060.1, REV-1, paragraph 2-17, Operating
Not Pay All Its Own Expenses, specifies the mortgagee is responsible for paying
Operating Expenses all of its operating expenses. The operating expenses that
must be paid by the mortgagee include but are not limited
to equipment, furniture, office rent, overhead, and other
similar expenses incurred in operating a mortgage lending
business. Also, Mortgagee Letter 2000-15 states that if
“the expenses are paid by the branch manager from a
personal or non-mortgagee account (or by some third
party), the arrangement is prohibited and a true branch does
not exist.”
Mortgage America does not pay all of its employees’
operating expenses. When the Marlow Heights office was
opened in 2002, the employees furnished the office. These
employees personally paid for computers, telephones, a
copy machine, and other office supplies. Mortgage
America did not reimburse the employees for the set up of
the office.
2004-PH-1012 Page 6
Finding 1
Also, the employees continue to pay general expenses such
as office supplies, maintenance of the copier and
computers, and the office’s phone bill. When questioned
about the payment of office expenses, Mortgage America
stated that it pays the bills for the branch offices when it
receives the bills from the loan officers. However,
Mortgage America declared it is difficult to pay expenses
when the officers in the respective branch offices do not
submit bills to be paid. Mortgage America holds the staff
responsible for submitting bills to be paid.
In addition, Mortgage America was unable to provide
evidence of who was paying the lease for the Marlow
Heights office space. We requested a copy of the lease
agreement for the Marlow Heights office, but; Mortgage
America was not able to provide us with one. Therefore,
we question whether Mortgage America is paying for
and/or leasing the office space for the Marlow Heights
office.
Mortgage America’s failure to pay all of its employees’
operating expenses is a direct violation of HUD/FHA
regulations. Not paying all the operating expenses creates
a prohibited arrangement, and a true net branch does not
exist.
Mortgage America Did HUD Handbook 4060.1, REV-1, paragraph 2-16, Office
Not Notify HUD Of Facilities, states a mortgagee's main office must be its
Business Changes designated facility to which HUD directs all
communications about the management affairs of the
mortgagee and from which the public obtains information
on the activities of the mortgagee. In addition, paragraph
2-21 specifies that mortgagees be required to notify HUD
within 10 days of all corporate changes.
As discussed above, Mortgage America moved its main
office from the Silver Spring location to 3930 Knowles
Avenue, Suite 305, Kensington, MD, sometime in June or
July 2003. However, Mortgage America failed to notify
HUD of this change. By not notifying HUD of its new
office location, Mortgage America’s main branch in
Kensington, MD is not an FHA-approved office. In
addition, with no knowledge of its new office location,
HUD is still directing all correspondence to an address at
Page 7 2004-PH-1012
Finding 1
which Mortgage America no longer operates. Therefore,
HUD is not able to accurately monitor the office activities
of Mortgage America.
HUD Handbook 4060.1, REV-1, paragraph 2-16, Office
Facilities, stipulates offices must be clearly labeled so that
they are properly identified to the public. Mortgage
America’s branch office in Marlow Heights is located in a
residential neighborhood. The office is located inside a
detached house. The exterior of this building has no
business signs to inform the public that it is either acting as
a business or operating as a branch office of Mortgage
America.
Mortgage America In our opinion, the deficiencies addressed above and in
Claimed A Lack Of Findings 2 and 3 stem from Mortgage America’s disregard
Knowledge Of HUD for or lack of knowledge of HUD requirements. Mortgage
Requirements America admittedly failed to obtain the necessary
understanding of HUD/FHA rules and regulations. This
led to its inability to ensure the accuracy, validity, and
completeness of its loan origination operations. This
disregard or lack of knowledge has greatly increased the
risk to the FHA insurance fund.
Auditee Comments Except for Mortgage America’s disagreement with our
finding that a loan officer cannot simultaneously be
employed as a real estate agent, Mortgage America
generally agreed with our findings. In its response to the
audit, it documented the actions it has taken to date to
correct the deficiencies noted during the review. In
December 2003, the General Manager was replaced.
Under the new General Manager a systematic review of
Mortgage America’s operations and procedures was
completed. A CPA was hired to assist in establishing the
financial records and accounting system for the upcoming
year. New contracts were issued to all loan officers and
branch managers, requiring exclusivity. Leases were
obtained for all offices, and bills are being collected and
paid by the main Mortgage America office. In addition, all
branch locations have been reported to HUD and are
properly identified to the public.
2004-PH-1012 Page 8
Finding 1
Mortgage America states that there are many realtors who
also are employed as loan officers in the industry.
Mortgage America believes that because the loan
officer/realtor did not receive a commission from Mortgage
America on any loan for which they serve as the realtor,
there is no violation of HUD/FHA’s exclusivity rules.
OIG Evaluation of We are encouraged by the changes Mortgage America
Auditee Comments stated it has started to implement in response to the issues
noted in this report. However, HUD will need to determine
whether the proposed actions have been completed and are
acceptable to correct the problems. Regarding the
exclusivity of employees, we maintain our stance that the
loan officer/realtor relationship is a violation of HUD/FHA
regulations.
Recommendations We recommend that the Assistant Secretary for Housing-
Federal Housing Commissioner:
1A. Require Mortgage America to take immediate action to
correct the operational deficiencies that are not in
compliance with HUD/FHA loan correspondent
approval requirements.
1B. Seek indemnification from Mortgage America against
future losses to HUD/FHA on 13 of the 17 loans
(original mortgage amounts totaling $1,878,205)
originated from unauthorized offices in Marlow
Heights/Camp Springs and Silver Spring.
1C. Seek reimbursement from Mortgage America to
HUD/FHA for the net loss incurred by HUD (claims
totaling $531,906) on the four remaining loans
originated from the unauthorized offices which have
already been conveyed to HUD.
1D. Seek indemnification against future losses to
HUD/FHA on the four loans (original mortgage
amounts totaling $573,390) originated in Mortgage
America’s name and/or using Mortgage America’s
Page 9 2004-PH-1012
Finding 1
origination identification by non-Mortgage America
employees.
1E. Take administrative actions against the former General
Manager of Mortgage America for continued non-
compliance with HUD/FHA rules and regulations.
1F. Determine whether Mortgage America’s deficiencies in
its mortgagee approval requirements warrant
administrative actions and/or its removal from
participation in HUD’s Single Family Mortgage
Insurance Programs.
1G. If HUD determines Mortgage America can maintain its
approval as a non-supervised loan correspondent, take
appropriate monitoring measures to ensure that
Mortgage America discontinues the practice of
submitting loans that are originated by non-Mortgage
America employees or unauthorized branches.
2004-PH-1012 Page 10
Finding 2
Mortgage America Could Not Justify Loan
Discount Fees and Premium Rate Mortgages
Charged to Borrowers
Mortgage America did not comply with HUD/FHA loan origination regulations. It failed to justify
loan overages (loan discount fees) charged to 13 borrowers; provided premium rate mortgages
without reducing the borrower’s closing costs (yield spread premiums) in 14 loans; and charged a
real estate commission fee to one borrower when a financial interest existed between the real estate
agent and Mortgage America. In our opinion, these deficiencies are a result of Mortgage
America’s disregard for or lack of understanding of HUD/FHA loan origination requirements.
In addition, Mortgage America did not adequately supervise its branches and employees.
Consequently, FHA loans originated by Mortgage America had unnecessarily higher mortgage
payments, resulting in an increased risk to the FHA insurance fund.
Mortgage America Could The Tiered Pricing Rule, as described in 24 Code of Federal
Not Justify Discount Fees Regulations (CFR) 202.12 and HUD Mortgagee Letters 94-
It Charged Borrowers 16 and 94-43, allows the lender to charge overages (discount
fees) and retain them; however, a lender’s customary lending
practices may not provide for a variation in “mortgage charge
rates” (discount point, origination fee and other such fees)
exceeding two percentage points on its FHA-insured single
family mortgages within a geographical area. Any variation
within two percentage points must be based on actual
variations in fees or costs to the lender to make a loan.
Whenever a lender makes a variation in pricing within the
two percent, the lender must provide a justification. A record
of the justification must be maintained for a period of at least
two years and must be made available to the Secretary of
Housing and Urban Development upon demand.
Mortgage America charged borrowers overages in the form
of loan discount fees in 16 of the 22 cases we reviewed. The
loan discount fees were between 0.5 and 3.0 percent of the
loan amount. However, we found in 13 of the 16 loans no
justification was provided showing the reasons for the
variations. When we asked the Operations Manager about
the loan discounts, we were told that the loan discount is a
way for Mortgage America to get a second origination fee.
The loan discount fees in the 13 loans totaled $23,841 (see
Appendix F, Chart 1).
Page 11 2004-PH-1012
Finding 2
In addition, the borrower in one case (249-4274668) was
charged $3,877 or 3.75 percent of the loan amount for
“services rendered.” The HUD-1 closing statement indicates
this amount was “paid outside of closing” by the borrower to
Mortgage America. However, we found no documentation to
justify what services were “rendered” by Mortgage America
for the additional fees or costs incurred in originating this
loan.
These overages charged by Mortgage America totaling
$27,718 were not properly supported; therefore, we consider
them to be a violation of HUD/FHA regulations.
Mortgage America Mortgagee Letter 94-7, states that premium rate mortgages
Provided Premium Rate (yield spread premiums), also known as “rebate pricing”
Mortgages To Borrowers mortgages, permit the borrower to pay a slightly higher
Without Reducing interest rate in exchange for the lender paying the borrower’s
Closing Costs closing costs. For mortgages to be insured by HUD, the funds
derived from a premium interest rate must be disclosed on the
“good faith estimate” and the HUD-1 settlement statement.
The good faith estimate and HUD-1 settlement statement
must provide an itemized statement indicating which items
are being paid on the borrower’s behalf; disclosing only a
lump sum is not acceptable.
We found Mortgage America provided 14 borrowers with
premium rate mortgages without reducing the borrower’s
closing costs. Mortgage America provided no evidence that
the borrower received an up-front reduction in closing costs
nor did the itemized closing statements indicate any items
were paid on the borrower’s behalf. In total 19 of the 22
loans we reviewed contained yield spread premiums. In 14 of
the 19 loans, the 1.0 percent loan origination fee plus an
additional loan discount fee were charged in addition to the
yield spread premiums. The yield spread premiums in these
14 cases totaled $52,888 and ranged from $1,031 to $6,093.
The total of the loan origination fee plus the loan discount fee
in these cases ranged from $1,842 to $6,007 (see Appendix F,
Chart 2).
For example, in one loan for $187,468 (249-4493039), the
borrower paid a loan origination fee of $1,847 and a loan
discount fee of $3,749. In addition to these fees, the loan
contained one yield spread premium of $6,093 and a second
2004-PH-1012 Page 12
Finding 2
yield spread premium of $3,241. The total of all these fees is
$14,930 or 8.0 percent of the loan amount.
Mortgage America did not provide any evidence to
demonstrate the borrower actually received an up-front
reduction in closing costs nor did the itemized closing
statements indicate any items were paid on the borrower’s
behalf. Instead, it appears that the broker simply delivered a
loan with a higher interest rate with no benefit being provided
to the borrower. Therefore, we consider the yield spread
premiums in these 14 cases, totaling $52,888, to be a
violation of HUD/FHA regulations.
Borrower Paid A HUD Handbook 4000.2, REV-2, paragraph 5-3, subpart L,
Prohibited Real Estate Real Estate Broker’s Fees, explains that real estate broker’s
Broker’s Fee fees are allowable only if the broker is engaged independently
by the mortgagor. It also states that these fees are prohibited
if there is any financial interest between the broker and the
mortgagee.
As discussed in Finding 1, the branch manager/loan officer of
Mortgage America’s Marlow Heights office is also employed
as an agent of Murrell, Incorporated, Realtors. In one loan
(249-4781170) the borrower paid a real estate commission to
Murrell, Incorporated, Realtors in the amount of $8,250. This
loan was originated from Mortgage America’s Marlow
Heights office. However, the branch manager/loan officer of
this branch office acted as the agent for Murrell, Incorporated,
Realtors on this loan. Due to the financial interest between
the broker and the mortgagee, we consider this fee to be
unallowable.
Auditee Comments Mortgage America disagrees with our finding. In its
response to the audit, it explains that charging yield spread
premiums and broker discount fees on both FHA and
conventional loans has been common practice for at least
20 years throughout the lending industry. Mortgage
America states that the sponsoring lenders monitor each
loan to ensure compliance with HUD/FHA regulations.
Never has a sponsoring lender questioned Mortgage
America on this practice.
Page 13 2004-PH-1012
Finding 2
OIG Evaluation of We do not dispute that charging variations (discount fees)
Auditee Comments and yield spread premiums are allowed practices.
However, we maintain our stance that Mortgage America
failed to provide (1) justification for the discount fees they
charged and (2) reductions in the up front cash owed by the
borrower or an itemized statement on either the HUD-1
settlement statement or good faith estimate showing which
items were paid on the borrower’s behalf in cases in which
a yield spread premium was charged. We agree that the
sponsoring lenders are responsible for reviewing each loan
for compliance with HUD/FHA regulations; however, this
does not absolve Mortgage America of its duties to comply
with those regulations.
Recommendations We recommend that the Assistant Secretary for Housing-
Federal Housing Commissioner:
2A. Require Mortgage America to establish policies and
procedures to ensure loans originated by its main and
branch offices are in compliance with HUD/FHA loan
origination regulations pertaining to tiered pricing and
premium rate mortgages.
2B. Determine the eligibility of the $27,718 in overages
charged by Mortgage America, which lacked adequate
pricing documentation to justify such fees. If it is
determined these fees are ineligible, require Mortgage
America to reimburse the fees charged totaling $27,718
as follows:
i. If the loan is current, a refund must be made to the
borrowers.
ii. If the loan is delinquent, a refund must be applied
to the delinquency.
iii. If a claim has been paid, a refund must be paid to
HUD and sent to HUD Single Family Claims.
2C. Require Mortgage America to reimburse the ineligible
$52,888 in yield spread premiums as follows:
i. If the loan is current, a refund must be made to the
borrowers.
ii. If the loan is delinquent, a refund must be applied
2004-PH-1012 Page 14
Finding 2
to the delinquency.
iii. If a claim has been paid, a refund must be paid to
HUD and sent to HUD Single Family Claims.
2D. Require Mortgage America to reimburse the ineligible
$8,250 real estate commission as follows:
i. If the loan is current, a refund must be made to the
borrowers.
ii. If the loan is delinquent, a refund must be applied
to the delinquency.
iii. If a claim has been paid, a refund must be paid to
HUD and sent to HUD Single Family Claims.
Page 15 2004-PH-1012
Finding 2
THIS PAGE LEFT
BLANK
INTENTIONALLY
2004-PH-1012 Page 16
Finding 3
Mortgage America’s Quality Control Process
Continues to Be Inadequate
Mortgage America did not adequately develop and implement a quality control plan that fully meets
HUD requirements as outlined in HUD Handbook 4060.1, REV-1, chapter 6. It failed to conduct
the required quality control reviews or maintain its loan origination case files for the required 2-
year period. The deficiencies associated with Mortgage America’s quality control plan and
procedures stem from either its disregard for or lack of knowledge of HUD’s and its own quality
control requirements. Therefore, Mortgage America is unable to guarantee the accuracy, validity,
and completeness of its loan origination operations.
Mortgage America’s As a condition of the HUD/FHA approval process, loan
Quality Control Plan Does correspondents must have and maintain a quality control plan
Not Meet HUD for the origination and servicing of insured mortgages. HUD
Requirements Handbook 4060.1, REV-1, chapter 6, provides the general
requirements along with mortgagee type specific
requirements, for quality control plans. The primary objective
of a quality control plan is to assure compliance with
HUD/FHA requirements.
During a review conducted by the Philadelphia
Homeownership Center in 2001, Mortgage America was
informed that its quality control plan did not contain all of the
specific elements as outlined in HUD Handbook 4060.1,
REV-1, chapter 6. HUD instructed Mortgage America to
update its plan to include all the required elements that
pertain to loan correspondents. Mortgage America completed
some of the necessary changes but not all. Thus, its quality
control plan continues not to meet HUD requirements.
Mortgage America’s quality control plan did not include
procedures to:
• Identify and review all loans that go into default within
6 months of closing,
• Require on-site branch office reviews at least once a
year,
• Identify the cause of deficiencies and initiate prompt
action to notify employees to correct the deficiencies, or
Page 17 2004-PH-1012
Finding 3
• Require notification to HUD of significant
discrepancies.
The lack of an adequate quality control plan prevented
Mortgage America from evaluating the accuracy, validity,
and completeness of its loan origination operations.
Therefore, potential deficiencies in the loan origination
process were not identified and corrected.
Past Quality Control In the Philadelphia Homeownership Center 2001
Reviews Were Not monitoring review, Mortgage America was unable to
Adequate provide any evidence it completed quality control reviews.
However, during our review Mortgage America did
provide us with copies of past quality control reviews for
loans it originated from January 1, 1999, through October
31, 2001. All three reviews were performed by an
independent agency. Further, each of the audit summation
letters that was provided to Mortgage America’s
management stated, “All files were given a cursory review
for set-up and calculation accuracy. The information in the
files was not re-verified.” As such these three reviews are
insufficient and do not meet the requirements of a quality
control review.
HUD Handbook 4060.1, REV-1, paragraph 6-1, General,
states that the quality control plan must be a prescribed
function of the mortgagee’s operations and assure that the
mortgagee maintains compliance with HUD/FHA
requirements and its own policies and procedures.
Mortgage America’s own quality control plan requires a
“thorough analysis of the information by the quality control
reviewer, as opposed to a cursory check of the existence of
the various documents.”
No Quality Control We found that Mortgage America has not completed any
Reviews Have Been quality control reviews for loans originated after
Completed Since October October 31, 2001. The failure to implement quality control
2001 procedures prevents Mortgage America from evaluating the
accuracy, validity, and completeness of its loan origination
operations and increases the overall risk to the FHA
insurance fund.
2004-PH-1012 Page 18
Finding 3
Case Files Were Not HUD Handbook 4000.2, REV-2, paragraph 5-10, Retention
Retained For The of Files, states the originating mortgagee must retain the
Required Two-Year entire case file pertaining to loan origination, either in hard
Period copy or microfilm form, for at least 2 years from the date of
insurance endorsement for auditing purposes. We requested
that Mortgage America provide us copies of the 22 loan files
we selected for review. It provided us 5 of the 22 loan files
we requested. It did not retain 17 of the 22 loan origination
files for the required 2 years; therefore, it was unable to
ensure the loan origination process was properly documented.
Auditee Comments Mortgage America agreed with our findings. On March 1,
2004, it hired a manager to maintain a quality control
department. As part of his duties, he will ensure that all
loan files (past and present) are organized and complete
and that the data maintained in the files meets Mortgage
America’s quality control plan. In addition, he will
implement a verbal/written quality control audit of 10
percent of all loans originated from January 1, 2003, to
July 20, 2004, and provide monthly updates of his progress
in each area, bring deficiencies to management’s attention,
and implement remedies. Lastly, the quality control
manager will add Neighborhood Watch status checks to the
quality control plan starting in September 2004 and review
all loans that go into default within 6 months to determine
the cause and to correct deficiencies.
OIG Evaluation of We are encouraged by the changes Mortgage America
Auditee Comments stated it has started to implement in response to the issues
noted in this report. However, HUD will need to determine
whether the proposed actions have been completed and are
acceptable to correct the problems.
Recommendations We recommend that the Assistant Secretary for Housing-
Federal Housing Commissioner:
Page 19 2004-PH-1012
Finding 3
3A. Take appropriate monitoring measures to ensure that
Mortgage America makes changes to its existing
quality control plan according to HUD requirements.
3B. Require Mortgage America’s senior management to
implement the quality control plan. The controls should
ensure that deficiencies in the loan origination process
are identified and corrected before the loan packages
are submitted to the direct endorsement sponsor.
3C. Require Mortgage America to take immediate action to
comply with HUD’s loan retention requirements.
3D. Take appropriate administrative action(s) due to the
continual deficiencies and noncompliance with HUD
requirements.
2004-PH-1012 Page 20
Management Controls
In planning and performing our audit, we considered the management controls of Mortgage America
Bankers, LLC to determine the audit procedures, not to provide assurance on its management
controls. Management controls include the plan of organization, methods and procedures adopted
by management to ensure that its goals are met; the processes for planning, organizing, directing,
and controlling program operations; and the systems for measuring, reporting, and monitoring
program performance.
Relevant Management We determined the following management controls were
Controls relevant to our audit objectives:
• Loan Origination Process - Policies and procedures that
management has in place to reasonably ensure that the
loan origination process complies with the HUD/FHA
program requirements.
• Quality Control Plan - Policies and procedures that
management has in place to reasonably ensure
implementation of HUD/FHA quality control
requirements.
The following audit procedures were used to evaluate the
management controls:
• Review of established procedures formulated by
Mortgage America in originating FHA-insured loans,
• Interviews with officials and employees of Mortgage
America,
• Examination of records and related documents for FHA-
insured loans originated between September 1, 2001 and
September 30, 2003,
• Review of records and files maintained by HUD’s
Quality Assurance Division in connection with the
oversight of Mortgage America, and
• Interviews with applicable officials and employees of
HUD’s Quality Assurance Division relating to activities
associated with Mortgage America.
Page 21 2004-PH-1012
Management Controls
Significant Weaknesses A significant weakness exists if management controls do not
give reasonable assurance that resource use is consistent
with laws, regulations, and policies; that resources are
safeguarded against waste, loss, and misuse; and that
reliable data are obtained, maintained, and fairly disclosed
in reports.
Our review of Mortgage America’s management controls
over its loan origination and quality control procedures for the
origination of FHA-insured loans showed Mortgage America
did not comply with HUD requirements. Our audit disclosed
the following significant weaknesses with Mortgage
America’s Single Family loan program:
• Quality control process,
• Operating in accordance with HUD/FHA mortgagee
approval requirements, and
• The loan origination process.
The deficiencies are discussed in detail in the findings in this
report.
2004-PH-1012 Page 22
Follow Up On Prior Audits
This is the first audit of Mortgage America Bankers, LLC conducted by HUD’s Office of the
Inspector General. The mortgagee’s last independent audit report for the year ending December 31,
2002, did not contain any findings.
Page 23 2004-PH-1012
Follow Up On Prior Audits
THIS PAGE LEFT
BLANK
INTENTIONALLY
2004-PH-1012 Page 24
Appendix A
Schedule of Questioned Costs
and Funds to Be Put to Better Use
Recommendation Type of Questioned Cost Funds Put to
Number Ineligible 1/ Unsupported 2/ Better Use 3/
1B $ 1,878,205
1C $ 531,906
1D $ 573,390
2B $27,718
2C $52,888
2D $ 8,250
Totals $61,138 $27,718 $ 2,983,501
1/ Ineligible costs are costs charged to a HUD-financed or HUD-insured program or activity
that the auditor believes are not allowable by law; contract; or federal, state, or local
policies or regulations.
2/ Unsupported costs are costs charged to a HUD-financed or HUD-insured program or
activity, and eligibility cannot be determined at the time of audit. The costs are not
supported by adequate documentation or there is a need for a legal or administrative
determination on the eligibility of the costs. Unsupported costs require a decision by
HUD program officials. This decision, in addition to obtaining supporting
documentation, might involve a legal interpretation or clarification of Departmental
policies and procedures.
3/ Funds Put to Better Use are costs that will not be expended in the future if our
recommendations are implemented.
Page 25 2004-PH-1012
Appendix A
THIS PAGE LEFT
BLANK
INTENTIONALLY
2004-PH-1012 Page 26
Appendix B
Twenty-Two FHA-Insured
Loans Selected for Review
The following shows the 22 loans selected for review:
Default Information
Case Number Mortgage Amount Current Status Code as of 10/3/03 Sponsor Name
081-0717369 $150,727.00 46 Wells Fargo
081-0724563 $144,732.00 Y 28 Wells Fargo
249-4244377 $126,308.00 20 Wells Fargo
249-4382189 $163,195.00 Y 42 Wells Fargo
249-4471936 $100,207.00 Y 68 International Mort. Corp
249-4493039 $187,468.00 Y 68 International Mort. Corp
249-4445170 $139,894.00 20 Fidelity Home Mortgage
249-4445187 $173,627.00 20 Fidelity Home Mortgage
249-4467153 $148,824.00 20 Fidelity Home Mortgage
249-4210423 $129,972.00 Y 45 Fidelity Home Mortgage
249-4274668 $103,377.00 Y 68 Fidelity Home Mortgage
081-0701658 $104,562.00 19 Fidelity Home Mortgage
081-0710298 $ 92,766.00 Y 28 Fidelity Home Mortgage
241-6581097 $124,019.00 Y 42 Fidelity Home Mortgage
249-4818445 $205,680.00 NR NR Wells Fargo
249-4648938 $166,320.00 NR NR Wells Fargo
249-4766144 $121,800.00 NR NR Wells Fargo
249-4781170 $103,603.00 NR NR Wells Fargo
249-4795770 $132,250.00 NR NR Wells Fargo
249-4803122 $148,824.00 NR NR First Mutual
249-4774857 $153,020.00 NR NR Wells Fargo
249-4779472 $148,824.00 NR NR First Mutual
Default Status
Codes Descriptions
19 Partial Reinstatement
20 Reinstated by Mortgagor
28 Modification
42 Delinquent 90 Days or More
45 Foreclosure Completed
46 Property Conveyed to Insurer
68 First Legal Action to Foreclose
NR None Reported in Neighborhood Watch
Page 27 2004-PH-1012
Appendix B
THIS PAGE LEFT
BLANK
INTENTIONALLY
2004-PH-1012 Page 28
Appendix C
Loan Originations at
Unauthorized Offices
The following are the 4 loans originated by unauthorized offices and already conveyed to HUD:
Default Status Claims Paid by FHA
Originating
Case Number Office Loan Amount Code As of 3/31/04 Principal Other
249-4471936 Camp Springs $100,207.00 46 1/1/2004 $104,957.49 $ 8,448.16
081-0710298 Camp Springs $ 92,766.00 46 1/1/2004 $ 96,854.02 -
249-4210423 Camp Springs $129,972.00 46 10/1/2003 $139,057.06 $14,326.95
081-0717369 Elton Road - SS $150,727.00 46 3/1/2003 $156,244.33 $12,018.33
Total $473,672.00 Totals $497,112.90 $34,793.44
Default Status
Codes Description
46 Property Conveyed to Insurer
Total claims paid by FHA (rounded to the nearest dollar):
$ 497,113 - Principal
$ 34,793 - Other
$ 531,906 - Total Claims Paid by FHA
The following are the remaining 13 loans originated by unauthorized branches:
Case Number Originating Office Loan Amount
249-4445170 Camp Springs $ 139,894.00
249-4274668 Camp Springs $ 103,377.00
249-4244377 Camp Springs $ 126,308.00
249-4382189 Camp Springs $ 163,195.00
249-4493039 Camp Springs $ 187,468.00
249-4445187 Camp Springs $ 173,627.00
249-4467153 Camp Springs $ 148,824.00
081-0701658 Camp Springs $ 104,562.00
249-4781170 Marlow Heights $ 103,603.00
249-4779472 Marlow Heights $ 148,824.00
249-4818445 Marlow Heights $ 205,680.00
249-4803122 Marlow Heights $ 148,824.00
241-6581097 Elton Road - SS $ 124,019.00
Total Original Loan Amounts $1,878,205.00
Page 29 2004-PH-1012
Appendix C
THIS PAGE LEFT
BLANK
INTENTIONALLY
2004-PH-1012 Page 30
Appendix D
Loans Originated by
Non-Mortgage America Employees
The following are the loans closed by non-Mortgage America employees:
Loan Mortgagee Name Used to
Case Number Originating Office Amount Close the Loan
249-4648938 1st Metropolitan $166,320.00 1st Metropolitan Mortgage
249-4766144 1st Metropolitan $121,800.00 1st Metropolitan Mortgage
Mortgage America
249-4795770 1st Metropolitan $132,250.00 Bankers
Mortgage America
249-4774857 1st Metropolitan $153,020.00 Bankers
Total $573,390.00
Page 31 2004-PH-1012
Appendix D
THIS PAGE LEFT
BLANK
INTENTIONALLY
2004-PH-1012 Page 32
Appendix E
Loans Originated at Marlow Heights/
Camp Springs Offices
The following are loans originated at Marlow Heights/Camp Springs Offices, some of which
involve Murrell, Incorporated, Realtors:
Loan
Case Number Originating Office Amount
249-4471936 Camp Springs $100,207.00 M
081-0710298 Camp Springs $ 92,766.00
249-4210423 Camp Springs $129,972.00
249-4445170 Camp Springs $139,894.00 M
249-4274668 Camp Springs $103,377.00
249-4244377 Camp Springs $126,308.00
249-4382189 Camp Springs $163,195.00
249-4493039 Camp Springs $187,468.00
249-4445187 Camp Springs $173,627.00
249-4467153 Camp Springs $148,824.00 M
081-0701658 Camp Springs $104,562.00
249-4781170 Marlow Heights $103,603.00 M,K
249-4779472 Marlow Heights $148,824.00 M,K
249-4818445 Marlow Heights $205,680.00
249-4803122 Marlow Heights $148,824.00 M
M - Murrell, Incorporated, Realtors was the real estate broker on these loans.
K - The Marlow Heights branch manager served as the real estate broker on these loans.
Page 33 2004-PH-1012
Appendix E
THIS PAGE LEFT
BLANK
INTENTIONALLY
2004-PH-1012 Page 34
Appendix F
Chart of Unearned and
Unallowable Fees
Chart 1 - shows the 13 loans for which unearned discount fees were charged:
FHA Case Number Loan Amount Origination Discount % of Loan Amount
249-4471936 $100,207.00 $ 987.27 $1,252.59 1.25%
249-4445170 $139,894.00 $1,378.27 $1,049.20 0.75%
249-4274668 $103,377.00 $1,018.50 $2,067.54 2.00%
081-0710298 $ 92,766.00 $ 913.96 $ 927.66 1.00%
081-0717369 $150,727.00 $1,485.00 $4,521.81 3.00%
249-4244377 $126,308.00 $1,263.08 $2,084.08 1.65%
249-4382189 $163,195.00 $1,631.95 $1,327.79 0.81%
249-4210423 $129,972.00 $1,280.52 $2,599.44 2.00%
081-0701658 $104,562.00 $1,030.17 $2,091.24 2.00%
249-4803122 $148,824.00 $1,466.25 $ 744.12 0.50%
241-6581097 $124,019.00 $1,221.87 $1,240.19 1.00%
249-4648938 $166,320.00 $1,638.63 $2,494.80 1.50%
249-4766144 $121,800.00 $1,200.00 $1,440.89 1.18%
Total Unearned Discount Fees $23,841.35
Chart 2 - shows the 14 loans with unearned yield spread premiums (YSP):
Fees Charged
Origination
FHA Case Number Loan Amount (A) Discount (B) Total of A+B 1st YSP 2nd YSP
249-4471936 $ 100,207.00 $ 987.27 $ 1,252.59 $ 2,239.86 $ 2,254.66
249-4445170 $ 139,894.00 $ 1,378.27 $ 1,049.20 $ 2,427.47 $ 1,031.02
081-0710298 $ 92,766.00 $ 913.96 $ 927.66 $ 1,841.62 $ 2,736.60
081-0717369 $ 150,727.00 $ 1,485.00 $ 4,521.81 $ 6,006.81 $ 1,101.81
249-4244377 $ 126,308.00 $ 1,263.08 $ 2,084.08 $ 3,347.16 $ 3,631.36
249-4382189 $ 163,195.00 $ 1,631.95 $ 1,327.79 $ 2,959.74 $ 5,457.24
249-4493039 $ 187,468.00 $ 1,846.98 $ 3,749.36 $ 5,596.34 $ 6,092.71 $3,241.32
249-4210423 $ 129,972.00 $ 1,280.52 $ 2,599.44 $ 3,879.96 $ 3,545.64
081-0701658 $ 104,562.00 $ 1,030.17 $ 2,091.24 $ 3,121.41 $ 3,245.60
249-4803122 $ 148,824.00 $ 1,466.25 $ 744.12 $ 2,210.37 $ 5,580.40
249-4648938 $ 166,320.00 $ 1,638.63 $ 2,494.80 $ 4,133.43 $ 3,953.43
249-4766144 $ 121,800.00 $ 1,200.00 $ 1,440.89 $ 2,640.89 $ 2,805.05
249-4774857 $ 153,020.00 $ 1,530.20 $ 1,147.65 $ 2,677.85 $ 3,352.67
081-0724563 $ 144,732.00 $ 1,425.94 $ 519.59 $ 1,945.53 $ 4,858.65
Totals $1,929,795.00 $19,078.22 $25,950.22 $45,028.44 $49,646.84 $3,241.32
Total Unearned Yield Spread Premiums (rounded to the nearest dollar):
$ 49,647 - 1st unearned yield spread premium
$ 3,241 - 2nd unearned yield spread premium
$ 52,888 - Total unearned yield spread premiums
Page 35 2004-PH-1012
Appendix F
THIS PAGE LEFT
BLANK
INTENTIONALLY
2004-PH-1012 Page 36
Appendix G
Auditee Comments
Page 37 2004-PH-1012
Appendix G
2004-PH-1012 Page 38
Appendix G
Page 39 2004-PH-1012
Appendix G
2004-PH-1012 Page 40
Appendix G
Page 41 2004-PH-1012
Appendix G
2004-PH-1012 Page 42
Mortgage America Bankers, LLC, a Non-Supervised Loan Correspondent, Kensington, Maryland
Published by the Department of Housing and Urban Development, Office of Inspector General on 2004-09-10.
Below is a raw (and likely hideous) rendition of the original report. (PDF)