oversight

First Magnus Financial Corporation Violated the Real Estate Settlement Procedures Act When Paying Incentives to Brokers for Generating Federal Housing Administration Mortgages

Published by the Department of Housing and Urban Development, Office of Inspector General on 2008-07-14.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                 Issue Date
                                                                       July 14, 2008
                                                                 Audit Report Number
                                                                       2008-LA-1013




TO:         Brian D. Montgomery, Assistant Secretary for Housing, Federal Housing
            Commissioner, H

            Henry S. Czauski, Acting Director, Departmental Enforcement Center, CV



FROM:       Joan S. Hobbs, Regional Inspector General for Audit, Region IX, 9DGA

SUBJECT: First Magnus Financial Corporation Violated the Real Estate Settlement
         Procedures Act When Paying Incentives to Brokers for Generating Federal
         Housing Administration Mortgages


                                   HIGHLIGHTS

 What We Audited and Why

             We audited the mortgage origination and business practices of the First Magnus
             Financial Corporation’s (First Magnus) corporate office in Tucson, Arizona. The
             objective of the audit was to determine whether First Magnus violated U.S.
             Department of Housing and Urban Development (HUD) requirements by paying
             its brokers volume-based incentives for originating and processing Federal
             Housing Administration (FHA) mortgages.


 What We Found


             First Magnus violated the Real Estate Settlement Procedures Act (RESPA) when
             it paid quality incentives, also known as volume-based incentives, to brokers for
             originating and processing FHA mortgages.
What We Recommend


           We recommend that HUD’s Assistant Secretary for Housing require First
           Magnus, for any current or future FHA mortgage operations for which First
           Magnus may exercise management control, to ensure that the practice of issuing
           incentive payments to brokers for originating and processing FHA mortgages is
           discontinued. Also, we recommend that First Magnus have their active status and
           approval to perform FHA business removed. Finally, we recommend that the
           HUD’s Acting Director for the Departmental Enforcement Center pursue
           administrative actions against the principal owners and management of First
           Magnus for allowing the improper practice of issuing incentive payments to
           brokers for originating and processing FHA mortgages.

           For each recommendation without a management decision, please respond and
           provide status reports in accordance with HUD Handbook 2000.06, REV-3.
           Please furnish us copies of any correspondence or directives issued because of the
           audit.

Auditee’s Response


           We discussed the report’s contents with responsible HUD officials, and their
           views were considered. Due to the closure of First Magnus and its subsequent
           bankruptcy, we were unable to obtain a formal response from the auditee.
           However, the finding in this report was discussed with First Magnus officials
           during the audit, and their views were also considered in preparing the report.




                                            2
                           TABLE OF CONTENTS


Background and Objective                                                     4

Results of Audit
      Finding 1: First Magnus Violated the RESPA When Paying Incentives to   5
                 Brokers for Generating FHA Mortgages

Scope and Methodology                                                        9

Internal Controls                                                            10

Appendix
   A. Schedule of Quality Incentive Payments                                 11




                                           3
                           BACKGROUND AND OBJECTIVE

Background

First Magnus was a wholesale lender that was incorporated and approved by HUD as a
nonsupervised lender in 1996. Its corporate office was located in Tucson, Arizona. As of June
30, 2008, First Magnus had 13 active branch offices and sponsored 1,961 FHA-approved loan
correspondents. As a wholesale lender, First Magnus underwrote and funded mortgages received
by its loan correspondents and other brokers.

First Magnus operated First Magnus Lender Services, which provided the following services to
its customers: full-service credit reporting, flood determination, appraisals, full-service
insurance, and title/escrow. In addition, First Magnus operated Charter Funding (Charter), the
retail-lending arm of the mortgage company. Charter’s corporate office was located in Tucson,
Arizona. Charter had affiliates in Arizona that provided the following services to its customers:
appraisals, insurance, credit reporting, and title/escrow.

During the period January 1, 2003, and December 31, 2005, First Magnus’ Tucson corporate
office issued $102,840 in quality incentives or bonuses to brokers for originating and processing
326 federally related mortgages (non-FHA-insured and FHA-insured) totaling more than $48
million. Of the payments made to brokers, $58,571 in quality incentives was paid for originating
and processing 169 FHA-insured mortgages totaling more than $24 million for First Magnus.

First Magnus Filed for Bankruptcy

On August 16, 2007, the state of Arizona Department of Financial Institutions suspended First
Magnus’ Arizona mortgage banker license. On August 21, 2007, First Magnus closed and filed
for Chapter 11 1 bankruptcy. Therefore, this report is being addressed to HUD since First
Magnus has closed its doors and is unavailable to respond to the report.

Objective

Our objective was to determine whether First Magnus violated HUD requirements by paying its
brokers volume-based incentives for originating and processing FHA mortgages.




1
 Named after the U.S. bankruptcy code 11 entitled Reorganization, Chapter 11 bankruptcy is ordinarily used by
commercial enterprises that desire to continue operating a business and repay creditors concurrently through a court-
approved plan of reorganization.


                                                         4
                                RESULTS OF AUDIT

Finding 1: First Magnus Violated the RESPA When Paying Incentives
to Brokers for Generating FHA Mortgages
First Magnus paid brokers $58,571 in quality incentives, also known as volume-based incentives,
to originate and process more than $24 million in FHA mortgages for the lender. It disregarded
HUD rules and requirements when originating and processing FHA mortgages. Specifically, the
mortgage company violated RESPA, which prohibits any inducements associated with the
origination and processing of FHA mortgages. RESPA was created to prevent companies
associated with the real estate industry from engaging in improper business practices that would
have negatively affected buyers’ housing related transactions such as obtaining a mortgage and
purchasing a home. For example, First Magnus executed agreements with brokers that required
them to originate and process a certain number of mortgages in exchange for a predetermined
fee. The intent of the agreements was to reward brokers based on the volume of mortgages
originated and processed within a designated month. As a result, this improper practice raised
concerns that brokers were not practicing due diligence in ensuring that homebuyers received
mortgages that were appropriate for their housing purchasing needs.



 First Magnus Issued Quality
 Incentives to Brokers for
 Originating and Processing
 FHA Mortgages


              During the period January 1, 2003, to December 31, 2005, First Magnus issued 22
              payments, totaling $58,571 in quality incentives or bonuses, to seven brokers for
              originating and processing 169 FHA-insured mortgages totaling more than $24
              million for First Magnus (see appendix A). The practice of paying brokers
              incentives for originating and processing FHA mortgages violates RESPA.

              RESPA states that in determining whether the compensation paid to a mortgage
              broker is reasonably related to goods or facilities actually furnished or services
              actually performed, HUD will consider all compensation, including any volume-
              based compensation. RESPA goes on to state that there may be no payments
              merely for referrals of business. In addition, HUD generally has held that when
              the payment is based on the volume or value of business transacted, it is evidence
              of an agreement for the referral of business, unless it is shown that payments are
              for legitimate business reasons unrelated to the value of the referrals. Regulations
              at 24 CFR (Code of Federal Regulations) 3500.14(b) of RESPA state that no
              person shall give and no person shall accept any fee, kickback, or thing of value
              pursuant to any agreement or understanding, oral or otherwise, that business



                                               5
                 incident to or part of a settlement service involving a federally related loan, or a
                 FHA mortgage, shall be referred to any person.

                 First Magnus established a Quality Incentive program that rewarded brokers for
                 originating and processing mortgages (e.g., FHA, U.S. Department of Veterans
                 Affairs (VA), conventional, etc.). Brokers entered into either verbal or written
                 agreements with First Magnus to participate in the program. Both types of
                 agreements followed the same objective of rewarding brokers for mortgage
                 volume generated for First Magnus. Brokers were rewarded based on either a
                 percentage point of the mortgage volume generated or through a tiered bonus
                 system. For the period reviewed, it appeared that the percentage point system was
                 the most commonly used method to reward brokers for mortgages generated.

                 Under the percentage point system, First Magnus paid its brokers a percentage
                 point of the mortgage volume (e.g. FHA, VA, conventional, and niche product
                 loans) processed and originated on a monthly basis. The agreed-upon percentage
                 point paid ranged from .125 percent to .25 percent of mortgage volume generated
                 by the broker during the month. For example, in December 2003, First Magnus
                 paid a broker $1,122 in quality incentives for processing and originating four
                 mortgages totaling $448,981. As part of the agreement, the broker received .25
                 percent of the $448,981 in mortgage volume generated, or $1,122 ($448,981
                 times .25 percent).

                 Under the tiered bonus system, First Magnus paid its brokers incentives based on
                 mortgage volume earned per millions in dollars generated for the month. Brokers
                 received bonuses using the following monetary criteria:

                                   Volume                    Earned incentives
                                $0 - $999,999                       $0
                                  $1 million                       $500
                           $1,000,001 - $3 million                $2,000
                           $3,000,001 - $5 million                $3,000
                           $5,000,001 - $10 million               $8,000
                            $10,000,001 and over 2                  $0

                 For example, in May 2004, a broker received $2,500 in incentives for mortgage
                 volume totaling more than $1 million. Using the tiered bonus chart above, the
                 broker received $500 for the first $1 million in mortgage volume and another
                 $2,000 for the remaining mortgage volume within the $1,000,001 to $3 million
                 range.

                 Discussions with various First Magnus regional managers revealed that quality
                 incentives were issued to brokers based on mortgage volume, not the type of
                 mortgage originated and processed. All mortgages (e.g., FHA, VA, conventional,
2
 Under the Quality Incentive program, brokers did not receive incentives for mortgage volume that exceeded
$10,000,001.


                                                       6
             etc.) were treated equally, with no particular type of mortgage receiving a higher
             incentive than another.


Conclusion


             From the information reviewed, we concluded that First Magnus’ practice of
             paying brokers in exchange for volume of FHA mortgages originated and
             processed was evidence of an agreement for referral of business from brokers to
             the lender. First Magnus appeared to pay brokers incentives for originating and
             processing FHA mortgages on a nationwide basis. As a result, First Magnus
             violated RESPA by issuing volume-based incentive payments to brokers in
             exchange for originating and processing FHA mortgages. The RESPA violation
             applies to federally related mortgages, including FHA-insured mortgages.

             First Magnus’ practice exposed HUD’s insurance fund to unnecessary risk due to
             brokers’ originating and processing FHA mortgages based on volume, without
             ensuring due diligence that the homebuyer received a mortgage that was
             appropriate for their needs. Accordingly, HUD should require that all current and
             future practices of issuing incentive payments to brokers for originating and
             processing FHA mortgages be discontinued. Also, we recommend that First
             Magnus have their active status and approval to perform FHA business removed.
             Finally, we recommend that HUD pursue administrative actions against the
             principal owners and management of First Magnus for allowing the improper
             practice of issuing incentive payments to brokers for originating and processing
             FHA mortgages.

Recommendations

             We recommend that the Assistant Secretary for Housing-Federal Housing
             Commissioner

             1A. Require First Magnus to discontinue the practice of issuing incentive
                 payments to brokers for originating and processing FHA mortgages should
                 it continue to perform FHA business.

             1B. Remove the active status and approval for First Magnus to perform FHA
                 business.




                                              7
We recommend that the Acting Director for the Departmental Enforcement
Center

1C. Pursue administrative action against the principal owners and management
    of First Magnus for allowing the improper practice of issuing incentive
    payments to brokers for originating and processing FHA mortgages.




                               8
                       SCOPE AND METHODOLOGY

We performed audit work from October 2005 through May 2006. The audit period covered
January 2003 through December 2005.

To accomplish our objective, we

   •   Interviewed First Magnus employees,

   •   Interviewed employees from other mortgage companies,

   •   Interviewed state and federal government agency employees,

   •   Reviewed First Magnus financial records, and

   •   Reviewed public records and databases.

We performed our review in accordance with generally accepted government auditing standards.




                                                9
                              INTERNAL CONTROLS

Internal control is an integral component of an organization’s management that provides
reasonable assurance that the following objectives are being achieved:

   •   Effectiveness and efficiency of operations,

   •   Reliability of financial reporting,

   •   Compliance with applicable laws and regulations, and

   •   Safeguarding of assets.

Internal controls relate to management’s plans, methods, and procedures used to meet its
mission, goals, and objectives. Internal controls include the processes and procedures for
planning, organizing, directing, and controlling program operations. They include the systems
for measuring, reporting, and monitoring program performance.



 Relevant Internal Controls

              We determined the following internal controls were relevant to our audit objectives:

              •   Reliability of mortgage documents used to approve FHA-insured mortgages.

              •   Origination and processing of FHA-insured mortgages in compliance with
                  HUD rules and regulations.

              •   Safeguarding FHA-insured mortgages from high risk exposure.

              We assessed the relevant controls identified above.

              A significant weakness exists if management controls do not provide reasonable
              assurance that the process for planning, organizing, directing, and controlling
              program operations will meet the organization’s objectives.

 Significant Weaknesses


              Based on our review, we believe the following item is a significant weakness:

              •   First Magnus disregarded applicable HUD rules and regulations when it paid
                  brokers volume-based incentives for originating and processing FHA
                  mortgages.


                                               10
                              APPENDIX

     Appendix A

           SCHEDULE OF QUALITY INCENTIVES PAYMENTS
                Broker     Payment Date   FHA           Mortgage       Quality
                                          Number        Amount        Incentive
                                                                       Earned
1    Greentree Mortgage   June 24, 2005   249-4994862   $267,452.00      $669.00
2    Greentree Mortgage   June 24, 2005   351-4687966   $181,989.00      $455.00
3    Greentree Mortgage   June 24, 2005   381-7530960    $89,218.00      $223.00
4    Greentree Mortgage   June 24, 2005   381-7569302   $140,646.00      $352.00
5    Greentree Mortgage   June 24, 2005   481-2497865    $75,516.00      $189.00
6    Greentree Mortgage   June 24, 2005   541-7176844   $161,168.00      $403.00
7    Greentree Mortgage   June 24, 2005   351-4690790    $89,162.00      $223.00
8    Greentree Mortgage   June 24, 2005   352-5369016   $182,990.00      $457.00
9    Greentree Mortgage   June 24, 2005   441-7565428   $220,964.00      $552.00
10   Greentree Mortgage   June 24, 2005   351-4653332   $125,861.00      $315.00
11   Greentree Mortgage   June 24, 2005   381-7592393    $95,773.00      $239.00
12   Greentree Mortgage   June 24, 2005   352-5361137   $284,707.00      $712.00
13   Greentree Mortgage   June 24, 2005   351-4688535   $155,769.00      $389.00
14   Greentree Mortgage   June 24, 2005   351-4692450   $137,367.00      $343.00
15   Greentree Mortgage   June 24, 2005   351-4692444   $114,783.00      $287.00
16   Greentree Mortgage   June 24, 2005   352-5366481   $200,970.00      $502.00
17   Greentree Mortgage   June 24, 2005   105-2220764    $92,474.00      $231.00
18   Greentree Mortgage   June 24, 2005   137-3186308   $140,845.00      $352.00
19   Greentree Mortgage   June 24, 2005   441-7626402   $109,149.00      $273.00
20   Greentree Mortgage   June 24, 2005   351-4695860   $198,432.00      $496.00
21   Greentree Mortgage   June 24, 2005   374-4456397   $293,070.00      $733.00
22   Greentree Mortgage   June 24, 2005   351-4693780   $145,078.00      $363.00
23   Greentree Mortgage   June 24, 2005   351-4694661   $130,970.00      $327.00
24   Greentree Mortgage   June 24, 2005   381-7591687   $130,530.00      $326.00
25   Greentree Mortgage   June 24, 2005   137-3191366   $140,500.00      $351.00
26   Greentree Mortgage   June 24, 2005   381-7566249   $115,090.00      $288.00
27   Greentree Mortgage   June 24, 2005   071-0995574   $188,411.00      $471.00
28   Greentree Mortgage   June 24, 2005   441-7636337   $101,804.00      $255.00
29   Greentree Mortgage   June 24, 2005   351-4694530   $127,170.00      $318.00
30   Greentree Mortgage   June 24, 2005   351-4690148   $124,010.00      $310.00
31   Greentree Mortgage   June 24, 2005   281-3154780    $63,845.00      $160.00
32   Greentree Mortgage   June 24, 2005   441-7624453    $77,647.00      $194.00
33   Greentree Mortgage   June 24, 2005   351-4687683   $129,920.00      $325.00
34   Greentree Mortgage   June 24, 2005   351-4686143   $131,036.00      $328.00
35   Greentree Mortgage   June 24, 2005   381-7582417    $87,797.00      $219.00



                                     11
             Broker          Payment Date        FHA           Mortgage       Quality
                                                 Number        Amount        Incentive
                                                                              Earned
36   Greentree Mortgage   June 24, 2005          381-7594914   $112,517.00      $281.00
37   Greentree Mortgage   June 24, 2005          381-7352016   $158,500.00      $396.00
38   Greentree Mortgage   June 24, 2005          351-4693427   $140,188.00      $350.00
39   Greentree Mortgage   June 24, 2005          352-5367934   $266,691.00      $667.00
40   Greentree Mortgage   June 24, 2005          137-3192072   $113,760.00      $284.00
41   Greentree Mortgage   June 24, 2005          352-5371656   $257,302.00      $643.00
42   Greentree Mortgage   June 24, 2005          541-7224904   $153,772.00      $384.00
43   Greentree Mortgage   June 24, 2005          381-7478825   $147,050.00      $368.00
44   Greentree Mortgage   June 24, 2005          105-1772589   $138,825.00      $347.00
45   Greentree Mortgage   June 24, 2005          249-4975886   $192,607.00      $482.00
46   Greentree Mortgage   June 24, 2005          441-7640456   $122,782.00      $307.00
47   Greentree Mortgage   June 24, 2005          441-7638787   $121,769.00      $304.00
48   Greentree Mortgage   June 24, 2005          441-7638872   $162,907.00      $407.00
49   Greentree Mortgage   June 24, 2005          541-7235291   $203,355.00      $508.00
50   Greentree Mortgage   June 24, 2005          105-2145937   $112,157.00      $280.00
51   Greentree Mortgage   June 24, 2005          352-5379042   $222,500.00      $556.00
52   Greentree Mortgage   June 24, 2005          351-4697391   $217,122.00      $543.00
53   Greentree Mortgage   June 24, 2005          351-4702485    $88,240.00      $221.00
54   Greentree Mortgage   June 24, 2005          441-7640150   $112,638.00      $282.00
55   Greentree Mortgage   June 24, 2005          351-4702541   $221,270.00      $553.00
56   Greentree Mortgage   June 24, 2005          352-5371078   $198,577.00      $496.00
57   Greentree Mortgage   June 24, 2005          105-2283437    $91,000.00      $228.00
58   Greentree Mortgage   June 24, 2005          351-4697385   $235,250.00      $588.00
59   Greentree Mortgage   June 24, 2005          351-4694179   $130,935.00      $327.00
60   Greentree Mortgage   June 24, 2005          351-4703565    $84,904.00      $212.00
61   Greentree Mortgage   June 24, 2005          352-5378791   $180,899.00      $452.00
62   Greentree Mortgage   June 24, 2005          441-7639015   $150,118.00      $375.00
63   Greentree Mortgage   June 24, 2005          441-7639622    $96,932.00      $242.00
64   Greentree Mortgage   June 24, 2005          261-8903353   $138,040.00      $345.00
65   Greentree Mortgage   June 24, 2005          105-2260842   $174,275.00      $436.00
66   Greentree Mortgage   June 24, 2005          381-7603234   $111,548.00      $279.00
67   Greentree Mortgage   June 24, 2005          381-7568450   $166,255.00      $416.00
68   Greentree Mortgage   June 24, 2005          483-3520059   $144,359.00      $361.00
69   Greentree Mortgage   June 24, 2005          441-7648443   $101,200.00      $253.00
70   Greentree Mortgage   September 27, 2005     541-7259818   $172,550.00      $431.00
71   Greentree Mortgage   September 27, 2005     061-2851588   $105,763.00      $264.00
72   Greentree Mortgage   September 27, 2005     381-7609933   $149,816.00      $375.00
73   Greentree Mortgage   September 27, 2005     351-4712611   $125,234.00      $313.00
74   Greentree Mortgage   September 27, 2005     351-4713249   $180,000.00      $450.00
75   Greentree Mortgage   September 27, 2005     352-5391775   $184,000.00      $460.00
76   Greentree Mortgage   September 27, 2005     351-4704956    $92,060.00      $230.00




                                            12
               Broker        Payment Date       FHA Number    Mortgage        Quality
                                                              Amount         Incentive
                                                                              Earned
77    Greentree Mortgage   September 27, 2005   441-7665096     $79,779.00     $199.00
78    Greentree Mortgage   September 27, 2005   351-4711543    $236,241.00     $591.00
79    Greentree Mortgage   September 27, 2005   483-3551590     $75,922.00     $190.00
80    Greentree Mortgage   September 27, 2005   481-2511403     $88,000.00     $220.00
81    Greentree Mortgage   September 27, 2005   441-7670362     $93,532.00     $234.00
82    Greentree Mortgage   September 27, 2005   483-3559116     $83,686.00     $209.00
83    Greentree Mortgage   September 27, 2005   351-4720749    $199,486.00     $499.00
84    Greentree Mortgage   September 27, 2005   352-5398954    $305,515.00     $764.00
85    Greentree Mortgage   September 27, 2005   351-4688427    $113,680.00     $284.00
86    Greentree Mortgage   September 27, 2005   352-5401396    $206,008.00     $515.00
87    Greentree Mortgage   September 27, 2005   351-4722047    $183,001.00     $458.00
88    Greentree Mortgage   September 27, 2005   352-5403295    $233,805.00     $585.00
89    Greentree Mortgage   September 27, 2005   351-4718042    $232,615.00     $582.00
90    Greentree Mortgage   September 27, 2005   351-4721715    $227,321.00     $568.00
91    Greentree Mortgage   September 27, 2005   351-4669151    $153,569.00     $384.00
92    Greentree Mortgage   September 27, 2005   351-4703352    $129,412.00     $324.00
93    Greentree Mortgage   September 27, 2005   105-2268449    $144,333.00     $361.00
94    Greentree Mortgage   September 27, 2005   483-3537054     $83,510.00     $209.00
95    Greentree Mortgage   September 27, 2005   351-4706298    $139,055.00     $348.00
96    Greentree Mortgage   September 27, 2005   351-4707692    $165,445.00     $414.00
97    Greentree Mortgage   September 27, 2005   137-3197714    $161,303.00     $403.00
98    Greentree Mortgage   September 27, 2005   071-0998196    $147,428.00     $369.00
99    Greentree Mortgage   September 27, 2005   281-3161121     $50,115.00     $125.00
100   Greentree Mortgage   September 27, 2005   352-5383660    $284,707.00     $712.00
101   Greentree Mortgage   September 27, 2005   093-5915781    $152,720.00     $382.00
102   Greentree Mortgage   September 27, 2005   441-7651617    $133,726.00     $334.00
103   Greentree Mortgage   September 27, 2005   351-4707295    $190,510.00     $476.00
104   Greentree Mortgage   September 27, 2005   442-2538986     $62,930.00     $157.00
105   Greentree Mortgage   September 27, 2005   483-3548874    $130,833.00     $327.00
106   Greentree Mortgage   September 27, 2005   351-4710213    $190,500.00     $476.00
107   Greentree Mortgage   September 27, 2005   352-5385582    $258,825.00     $647.00
108   Greentree Mortgage   September 27, 2005   351-4710452    $243,600.00     $609.00
109   Greentree Mortgage   September 27, 2005   241-7622493    $141,491.00     $354.00
110   Greentree Mortgage   September 27, 2005   441-7661751    $139,500.00     $349.00
111   Greentree Mortgage   September 27, 2005   352-5396556    $221,030.00     $553.00
112   Greentree Mortgage   September 27, 2005   381-7620442    $125,012.00     $313.00
113   Greentree Mortgage   September 27, 2005   105-2309096    $127,890.00     $320.00
114   Greentree Mortgage   September 27, 2005   381-7643177    $113,883.00     $285.00




                                        13
                Broker          Payment Date      FHA Number    Mortgage       Quality
                                                                Amount        Incentive
                                                                               Earned
115   Greentree Mortgage     September 27, 2005   351-4711292   $226,348.00     $566.00
116   Greentree Mortgage     September 27, 2005   105-2274943   $107,376.00     $268.00
117   Greentree Mortgage     September 27, 2005   381-7625658   $109,137.00     $273.00
118   Soma Financial         March 7, 2005        331-1223505    $90,735.00     $227.00
119   Soma Financial         March 7, 2005        331-1222834   $172,296.00     $431.00
120   Soma Financial         December 1, 2004     331-1219496   $107,574.00     $269.00
121   NV Mortgage            November 19, 2003    331-1196480   $153,975.00     $385.00
122   NV Mortgage            December 10, 2003    331-1197802    $89,949.00     $225.00
123   NV Mortgage            December 10, 2003    331-1197746   $108,698.00     $272.00
124   NV Mortgage            February 13, 2004    331-1161597   $119,836.00     $300.00
125   NV Mortgage            February 13, 2004    331-1200221   $159,803.00     $400.00
126   NV Mortgage            February 13, 2004    331-1192285   $145,125.00     $363.00
127   NV Mortgage            February 13, 2004    331-1202881   $108,349.00     $271.00
128   NV Mortgage            February 13, 2004    331-1191591   $137,283.00     $343.00
129   NV Mortgage            March 8, 2004        331-1204652   $189,235.00     $473.00
130   NV Mortgage            March 8, 2004        331-1195558   $133,726.00     $334.00
131   NV Mortgage            March 8, 2004        331-1192046   $150,919.00     $377.00
132   NV Mortgage            March 8, 2004        331-1203598   $103,278.00     $258.00
133   NV Mortgage            March 8, 2004        331-1204666   $158,891.00     $397.00
134   NV Mortgage            March 8, 2004        331-1204462   $113,921.00     $285.00
135   NV Mortgage            March 8, 2004        331-1187703   $102,350.00     $256.00
136   NV Mortgage            March 8, 2004        331-1203307   $157,632.00     $394.00
137   NV Mortgage            May 7, 2004          331-1187125   $124,468.00     $311.00
138   NV Mortgage            May 7, 2004          331-1206411   $118,681.00     $297.00
139   NV Mortgage            May 26, 2004         331-1204955   $158,047.00     $395.00
140   NV Mortgage            May 26, 2004         331-1209056    $91,923.00     $230.00
141   NV Mortgage            June 22, 2004        331-1208992   $102,902.00     $257.00
142   NV Mortgage            June 22, 2004        331-1211860   $125,820.00     $315.00
143   NV Mortgage            August 6, 2004       331-1212679   $153,846.00     $385.00
144   Southwest Funding      December 19, 2005    491-8672794   $150,117.00     $375.00
145   Southwest Funding      May 5, 2005          491-8567820    $58,974.00     $147.00
146   Southwest Funding      May 5, 2005          491-8626748    $83,685.00     $209.00
147   Southwest Funding      May 5, 2005          491-8604397   $150,220.00     $376.00
148   Coastal Lending Corp   June 25, 2003        495-6477582   $155,726.00     $195.00
149   Coastal Lending Corp   June 25, 2003        495-6482494   $168,236.00     $210.00
150   Coastal Lending Corp   June 25, 2003        495-6504646   $160,801.00     $201.00
151   Coastal Lending Corp   June 25, 2003        495-6503434    $76,886.00      $96.00
152   Coastal Lending Corp   June 25, 2003        495-6507101   $110,685.00     $138.00
153   Coastal Lending Corp   June 25, 2003        495-6530980   $156,716.00     $196.00
154   Coastal Lending Corp   June 25, 2003        495-6605544    $78,865.00      $99.00
155   Coastal Lending Corp   June 25, 2003        495-6685384   $125,012.00     $156.00
156   Coastal Lending Corp   June 25, 2003        495-6689681    $99,216.00     $124.00


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            Broker                Payment Date          FHA Number      Mortgage       Quality
                                                                        Amount        Incentive
                                                                                       Earned
157 Tri Coast Funding       Funded April 1-30, 2004     495-6798497      $74,196.00     $208.00
158 Tri Coast Funding       Funded April 1-30, 2004     495-6911945      $78,764.00     $208.00
159 Tri Coast Funding       Funded April 1-30, 2004     495-6933895     $133,941.00     $208.00
160 Tri Coast Funding       Funded May 1-31, 2004       495-6942562     $120,128.00     $208.00
161 Tri Coast Funding       Funded May 1-31, 2004       495-6990805     $110,027.00     $208.00
162 Tri Coast Funding       July 29, 2004               495-7004880     $126,004.00     $158.00
163 Tri Coast Funding       July 29, 2004               495-6974476     $137,837.00     $172.00
164 Tri Coast Funding       July 29, 2004               495-6989982     $136,852.00     $171.00
165 Tri Coast Funding       July 29, 2004               495-6943154     $165,791.00     $207.00
166 Tri Coast Funding       Funded July 1-31, 2004      495-6986898     $166,388.00     $208.00
167 Tri Coast Funding       Funded October 1-31, 2004   491-8510639     $102,454.00     $128.00
    Professional Mortgage
168 Alliance                December 1, 2004            052-3584464     $184,110.00     $460.00
    Professional Mortgage
169 Alliance                December 1, 2004            052-3568099     $196,910.00     $492.00
                                                        TOTAL         $24,512,362.00 $58,571.00




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