Issue Date
May 7, 2008
Audit Report Number
2008-SE-1004
TO: Brian D. Montgomery, Assistant Secretary for Housing – Federal Housing
Commissioner, H
FROM: Joan S. Hobbs, Regional Inspector General for Audit, Region X, 0AGA
SUBJECT:A A Plus Mortgage, Inc., Tukwila, WA, Overcharged Borrowers and Allowed
Independent Contractors and Unapproved Branches to Originate Loans
HIGHLIGHTS
What We Audited and Why
We audited A Plus Mortgage, Inc. (A Plus), to determine whether (1) the fees charged to
Federal Housing Administration (FHA) borrowers by A Plus were appropriate under U.S.
Department of Housing and Urban Development (HUD), FHA, and Real Estate
Settlement Procedures Act (RESPA) regulations and (2) the loan officers originating
FHA-insured loans were employees of A Plus.
What We Found
A Plus disregarded HUD FHA requirements and provisions of RESPA and engaged in
deceptive lending practices to maximize profits for itself and the independent contractors
that used A Plus as a conduit for submission of loans for FHA insurance. Although it
informed borrowers that they could receive a lower interest rate on their loans by paying
up-front points and fees, A Plus charged loan discount fees to borrowers without reducing
interest rates on the mortgages. This practice allowed A Plus to generate high interest
rate loans for which A Plus’s sponsor lenders paid A Plus a yield spread premium when
the loans closed escrow. As a result, borrowers paid excessive interest and fees for which
they received no associated benefit.
In addition, all 28 FHA-insured A Plus loans reviewed were originated by independent
contractors, unapproved branches, or other non-FHA-approved mortgage broker firms.
This condition occurred because A Plus ignored FHA origination requirements and
submitted FHA loans originated by unapproved entities in exchange for a percentage of
the loan origination fees, loan discount fees, and yield spread premiums generated by the
loans.
What We Recommend
We recommend that you require A Plus to (1) return unearned and excess yield spread
premiums, loan discount fees, and other fees, totaling $153,110, to the borrowers; (2)
review and analyze all other FHA-insured loans generated by A Plus with loan discount
points when no interest rate reduction occurred, report the results to the Mortgagee
Review Board, and issue refunds to the borrowers; (3) discontinue charging loan discount
fees when it receives yield spread premiums on a loan; (4) cease changing the names of
fees from the initial disclosure to the final HUD-1 settlement statement; (5) instruct its
loan officers to ensure that the borrowers clearly understand the nature of all charges
associated with their loans; (6) return all loan origination fees, totaling $32,036, to the
borrowers on all loans that were originated by third-party independent contractors; (7)
only submit loans for FHA insurance that were originated by A Plus employees; and (8)
register all of its branch offices with FHA.
We also recommend that you consider taking other appropriate administrative sanctions
against A Plus.
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 provided our discussion draft to A Plus on April 3, 2008, and held an exit conference
on April 4, 2008. A Plus generally disagreed with our report findings.
The complete text of the auditee’s response, along with our evaluation of that response,
can be found in appendix B of this report.
2
TABLE OF CONTENTS
Background and Objectives 4
Results of Audit
Finding 1: A Plus Charged Excessive Fees to Borrowers 5
Finding 2: A Plus Allowed Independent Contractors and Unapproved Branches to 12
Originate Insured Loans
Scope and Methodology 17
Internal Controls 18
Appendixes
A. Schedule of Questioned Costs 19
B. Auditee Comments and OIG’s Evaluation 20
C. Schedule of Excess and Unearned Fees 31
D. Schedule of Loan Origination Fees 32
E. Loans with Indications of Dual Employment of A Plus Loan Officers and 33
Supervisors
3
BACKGROUND AND OBJECTIVES
The U. S. Department of Housing and Urban Development (HUD) authorized A Plus Mortgage,
Inc. (A Plus), as a nonsupervised loan correspondent lender on August 11, 2004. Only A Plus’s
home office, located at 7200 South 180th Street, Suite #103, Tukwila, Washington, had been
approved by HUD to process and originate Federal Housing Administration (FHA) loans. Its
FHA mortgagee identification number is 21888-0000-2.
During our audit period, May 2005 through May 2007, A Plus originated 60 FHA loans totaling
almost $12 million. We reviewed 28 of the 60 FHA loans originated during our audit period.
Our objectives were to determine whether (1) the fees charged to FHA borrowers by A Plus were
appropriate under HUD, FHA, and Real Estate Settlement Procedures Act (RESPA) regulations
and (2) the loan officers for the loans reviewed were employees of A Plus.
4
RESULTS OF AUDIT
Finding 1: A Plus Charged Excessive Fees to Borrowers
A Plus disregarded HUD FHA requirements and provisions of RESPA and engaged in deceptive
lending practices to maximize profits for itself and the independent contractors who used A Plus
as a conduit for submission of loans for FHA insurance. Although it informed borrowers that
they could receive a lower interest rate on their loans by paying up-front points and fees, A Plus
charged the loan discount fees to borrowers without reducing the interest rates on the mortgages.
This practice allowed A Plus to generate high interest rate loans for which A Plus’s sponsor
lenders paid A Plus a yield spread premium when the loans closed escrow. Further, A Plus did
not always disclose the yield spread premiums in its good faith estimates and sometimes
confused borrowers by changing the names of fees in the loan documents. As a result, borrowers
paid excessive interest and fees for which they received no associated benefit.
HUD Requires Meaningful and
Timely Disclosure of Mortgage
Terms and Costs
In Mortgagee Letter 2001-26, HUD noted that meaningful disclosure of yield spread
premiums, as early as possible in the mortgage origination process, will avoid confusion
and enable borrowers to make informed choices. The mortgage transaction is necessarily
complicated, and most people engage in such transactions relatively infrequently. Timely
disclosure of up-front costs and mortgage terms would permit them to shop intelligently.
In its Statement of Policy 2001-1, HUD issued a clarification of the importance of
disclosure with a description of best practices.
Regulations at 24 CFR [Code of Federal Regulations] 201.2 define discount points as “a
fee charged by the lender, separate from interest but part of the total finance charges on
the loan that is part of the lender’s total yield on the loan needed to maintain a
competitive position with other types of investments. One discount point equals one
percent of the principal amount of the loan. As discount points on the loan increase, the
interest rate can be expected to decrease in a fairly consistent relationship.”
5
A Plus Used Mortgage Loan
Origination Agreements to
Explain Interest Rates and
Discount Fees
Premium pricing occurs when the lender sells a loan to an investor with an above-par
interest rate and receives a rebate (yield spread premium) from the investor. Disclosure
of the relationship of loan discount fees and yield spread premiums was made to the
borrowers on all 28 of the insured loans reviewed by way of a mortgage loan origination
agreement (agreement) between A Plus and each borrower. These agreements were
printed on A Plus letterhead and were signed by the borrowers and the loan officers. The
agreements stated:
“The lenders whose loan products we distribute generally provide their loan
products to us at a wholesale rate. The retail price we offer you, the interest
rate, total points and fees – will include our compensation. In some cases,
we may be paid all of our compensation by either you or the lender.
Alternatively, we may be paid a portion of our compensation by both you
and the lender. For example, in some cases, if you would rather pay a lower
rate, you may pay higher up-front points and fees. Also, in some cases, if
you would rather pay less up-front, you may be able to pay some or all of
our compensation indirectly through a higher interest rate, in which case,
we will be paid indirectly by the lender….”
This statement clearly indicated to borrowers that they would receive a lower interest rate
by paying higher up-front points and fees and that they would pay lower up-front fees in
exchange for accepting a higher interest rate loan.
A Plus Disregarded Its
Mortgage Loan Origination
Agreements
A Plus did not always follow the provisions of the agreements. It received yield spread
premiums from its sponsor lenders for all 28 of the loans reviewed, indicating that the
loans had above-market interest rates. In accordance with the agreements, the borrowers
should have expected that the yield spread premiums covered the compensation due to A
Plus and that their interest rates would be lowered when they paid higher up-front points
and fees. However, as shown in the following schedule, for 19 of these loans, A Plus
received yield spread premiums from its sponsor lenders, and the borrowers also paid
loan discount points and other fees to A Plus.
6
Loan Loan Yield Added Net paid to A
origin. discount spread broker Plus/
FHA case no. fee fee premium fee % of loan amt. Note
561-8275604 $ 935 $3,043 $3,084 $3,545 $10,607 / 5.7%
562-2046136 $1,457 $2,469 $3,513 $ 7,439 / 5.1%
561-8278635 $1,230 $2,360 $2,497 $ 6,087 / 5.0%
561-8292126 $1,995 $2,073 $5,960 $10,028 / 4.9%
562-2049727 $1,530 $2,074 $3,882 $ 7,486 / 4.9%
561-8308646 $1,665 $2,065 $4,014 $ 7,744 / 4.6%
561-8284753 $2,205 $1,119 $6,155 $ 9,479 / 4.3%
561-8282112 $1,400 $1,957 $3,915 $ 7,272 / 3.8%
561-8315965 $3,152 $1,090 $7,599 $11,841 / 3.8%
561-8161367 $1,497 $6,691 $ 7,442 / 3.7% 1
561-8252480 $1,900 $2,520 $2,170 $495 $ 7,085 / 3.7%
561-8315516 $1,405 $1,112 $2,317 $ 4,755/ 3.4% 2
561-8304752 $1,045 $1090 $ 795 $ 2,930 / 2.8%
561-8225722 $1,662 $ 831 $2,531 $ 4,535 / 2.7% 3
561-8298555 $1,040 $1,110 $3,431 $ 5,581 / 2.7%
561-8270990 $3,508 $1,780 $4,005 $ 9,293 / 2.6%
561-8295825 $1,095 $ 483 $1,588 $ 3,166 / 2.5%
561-8270484 $2,174 $1,090 $1,379 $ 4,643/ 2.1%
562-2043697 $1,016 $1,095 $1,016 $ 3,127 / 1.6%
Totals $29,319 $27,548 $65,437 $5,628 $130,540
Notes:
1 $746 of the fees and other costs shown were applied to borrower costs at closing.
2 $79 of the fees and other costs shown were applied to borrower costs at closing.
3 $489 of the fees and other costs shown were applied to borrower costs at closing.
A Plus Did Not Always Disclose
Yield Spread Premiums and
Changed the Names of Fees in
the Loan Documents
In 14 of the 28 loans reviewed, A Plus failed to disclose in its original good faith
estimates that it would receive yield spread premiums from its sponsor lenders at the loan
closings. Additionally, the nature and purpose of fees paid to A Plus became confusing
to borrowers because A Plus sometimes used different names or descriptions of a fee in
the good faith estimates or other disclosure documents than it used in the HUD-1
settlement statement. The following table gives examples of how the names of fees
varied from one document to another.
7
FHA case no. Original good faith estimate Final HUD-1
Loan discount 1.000% Discount broker fee to A+
$1,530 Mortgage $2,074
562-2049727
Yield spread premium (0-4%) Mrtg brkr Fee From NCB to A Plus
$6,120 Mortgage $3,882
Loan Origination fee 1.600% Broker Origination Fee – A Plus
$2,664 Mortgage $ 1,665
Loan Discount + Broker Discount – A Plus
561-8308646
$1,090 Mortgage $2,065
Yield Spread Premium 0-3% no Mortgage Broker Fee pd by NCB
dollar amount shown to A Plus Mortgage $4,014
Loan origination Fee + Broker Origination Fee – A Plus
$1,400 Mortgage $1,400
Loan discount 1.000% Discount Fee – A Plus Mortgage
561-8282112
$1,957 $1,957
Yield Spread Premium 1.492% Mortgage Broker Fee from NCB –
$2,877 A Plus Mortgage $3,915
Loan Origination Fee 1.000% Loan Origination Fee to A+
$1,825 Mortgage Inc. $1,900
561-8252480 Loan Discount 1.000% $1,825 Broker Fee $2,520
None disclosed Yield Spread Premium to A Plus
Mortgage Inc. $2,170
Loan Origination Fee 1.000% Broker. origination fee $1,405
561-8315516 $1,590
None disclosed Yield Spread Premium $2,317
We interviewed the borrowers of three insured loans. For one A Plus loan, the borrowers
told us that they had never bought a house before and that it was frustrating to see some
of the name changes of the yield spread premium that occurred from one document to
another. The borrowers also said that the loan officer did not want to give them time to
read all of the loan application documents including the A Plus origination agreement
that they signed. After reading the agreement during our interview, the borrowers said
that it appeared as though if they wanted to have lower payments, they could pay a loan
discount and if they paid a higher interest rate, some of the money from that higher
interest rate could help them with their closing costs up front. However, in their case, the
loan discount that the seller paid did not lower their interest rate, and they did not receive
any reduction in their costs from the yield spread premium collected by A Plus at the loan
closing.
Regarding another A Plus loan, the borrowers said, “It looks like we paid twice for some
of these costs. When we paid a loan discount that should have lowered the interest rate
and then we paid a mortgage interest rate that was higher than the market rate, we paid
twice for the amount that we paid in the form of a loan discount, because it would offset
some of the cost associated with the higher interest rate over the long haul.” The
8
borrowers stated that the loan officer did not fully disclose the nature of the payments in a
clear manner, which would have helped to make the loan process much less confusing for
them. They also commented that the way in which these costs were presented to them
and then misstated on the final HUD-1 made it impossible to follow. They further noted
that they felt rushed in the loan application signing process and did not have enough time
to digest the information on the forms signed.
In another loan, the borrowers were charged a $1,665 broker origination fee and a $2,065
broker discount, and the loan generated a $4,014 yield spread premium paid to A Plus.
The borrowers told us that they felt that the disclosure of the dollar amounts and what
they were paying for were “poorly represented as well as misrepresented” to them and in
the case of the yield spread premium, that it had not been disclosed to them at all. They
said that neither of them was well educated and they were disappointed that these costs
had not been explained to them in language that they could understand. They noted that
the loan officer was a “fast talker” and rushed them through the loan document signing
process.
Fees to Borrowers Can Only Be
Charged for Actual and
Necessary Services
Section 8(a) of RESPA prohibits the giving or accepting of any portion, split, or
percentage of any charge made or received for the rendering of a real estate settlement
service in connection with a transaction involving a federally related mortgage loan other
than for services actually performed. Services must be actually performed by the entity
that received the fee and must be necessary to the transaction and not duplicative of
services performed by others involved in the transaction. Also, compensation must be
reasonable.
HUD’s 1999 Statement of Policy established a two-part test for determining the legality
of lender payments to mortgage brokers for table-funded transactions and intermediary
transactions under RESPA: (1) whether goods or facilities were actually furnished or
services were actually performed for the compensation paid and (2) whether the
payments are reasonably related to the value of the goods or facilities that were actually
furnished or services that were actually performed. In applying this test, HUD believes
that total compensation should be scrutinized to ensure that it is reasonably related to the
goods, facilities, or services furnished or performed to determine whether it is legal under
RESPA.
It was unclear as to what role A Plus had in putting together the loan origination packages
for submission for FHA insurance. Finding 2 describes how A Plus acted as a conduit for
insured loans originated by independent contractors who were employed by other lenders,
consultants, real estate firms or owned unapproved independent branches. Documents in
the loan files indicated that the initial loan origination activity was done by these outside
entities and not by A Plus. Thus some of the fees paid may have been for duplicate
9
services. Further, the fees generated were excessive since, in most cases, the borrowers
not only paid the regular 1 percent loan origination fee, but also paid loan discount fees,
broker fees, and yield spread premiums without receiving any value for these additional
fees.
Lenders May Not Pay Mortgage
Broker Fees
Paragraph 1-9 I of HUD Handbook 4155.1, REV-5, relates to the disclosure and payment
of mortgage broker fees and states: “If the borrower must pay a fee directly to a
mortgage broker, that expense must be included in the total of the borrower’s cash
settlement requirements and appear on the HUD-1 Settlement Statement. (This
requirement applies to instances in which the borrower independently engages a
mortgage broker to seek financing and pays the broker directly. The payment may not
come from the lending institution.)”
All 28 loans reviewed were originated by independent contractors that were not
employees of A Plus but were employed by other lenders, consultants, or real estate firms
or owned unapproved independent branches (finding 2). Upon loan closing, A Plus
received the loan origination fee, loan discount, and other fees and the yield spread
premium from the escrow settlement service in the form of a check. Once the escrow
check was received by A Plus, its bookkeeper split the total amount of those funds
between itself and the independent contractor or unapproved branches that brokered the
FHA loans through A Plus. On average, for the 28 FHA loans reviewed, A Plus retained
nearly 16 percent of the funds with the remainder going to the independent contractor or
unapproved branch as a brokering commission.
Conclusion
A Plus did not fully disclose the nature of the fees charged to FHA borrowers and
sometimes changed the names of fees from one loan document to another. As a result,
the borrowers did not fully understand the fees paid, and loan proceeds were used to pay
for items such as loan discounts and other fees for which the borrowers received no
benefit. These excessive fees were generated to allow A Plus adequate funds to pay
commissions to outside unapproved brokers for bringing in the FHA loans, while earning
a percentage of the fees for acting as a conduit for submission of these loans for FHA
insurance.
10
Recommendations
We recommend that the Assistant Secretary for Housing – Federal Housing
Commissioner require A Plus to
1A. Return unearned and excess yield spread premiums, loan discount fees, and other
fees, totaling $153,110, to the borrowers of the loans shown at appendix C.
1B. Review and analyze all other FHA-insured loans generated by A Plus with loan
discount points when no interest rate reduction occurred and report the results to
the Mortgagee Review Board. Refunds should be issued to the borrowers.
1C. Discontinue charging loan discount fees when it receives yield spread premiums
on a loan.
1D. Cease changing the names of fees from the initial disclosure to the final HUD-1.
1E. Instruct its loan officers to ensure that the borrowers clearly understand the nature
of all charges associated with their loans.
We also recommend that the Assistant Secretary for Housing – Federal Housing
Commissioner:
1F. Refer A Plus Mortgage to the Mortgagee Review Board for consideration of
administrative sanctions and/or civil money penalties for the violations of HUD
requirements disclosed in this finding.
11
Finding 2: A Plus Allowed Independent Contractors and Unapproved
Branches to Originate Insured Loans
Contrary to FHA requirements, A Plus acted as a conduit for insured loans originated by
independent contractors and unapproved branches. All 28 FHA-insured A Plus loans reviewed
were originated by independent contractors, unapproved branches, or other non-FHA-approved
mortgage broker firms. This condition occurred because A Plus ignored FHA origination
requirements and submitted FHA loans originated by unapproved lenders in exchange for a
percentage of the loan origination fees, loan discount fees, and yield spread premiums generated
by the loans (finding1). As a result, borrowers paid excessive loan fees, and FHA incurred the
risks associated with insuring loans originated by firms and individuals that were not approved or
qualified to do so.
Loan Officers Must Be
Employees of the Lender
From the issuance of HUD Mortgagee Letter 94-39 on August 9, 1994, through the
current requirements of HUD Handbook 4060.1, REV-2, HUD has required that loan
officers originating FHA-insured mortgages be employees of the approved lender as well
as under the lender’s exclusive control and supervision. HUD Handbook 4060.1, REV-2,
chapter 2, paragraph 2-9(A), requires loan officers, also known as loan originators, of
FHA-insured mortgages to be employees of the lender and be under the lender’s
exclusive control and supervision. Managers, loan originators, and underwriters may not
be independent contractors or contract employees. Compensation of employees may be
on a salary, salary plus commission, or commission only basis and includes bonuses.
A Plus Loan Officers Were
Independent Contractors
A Plus entered into a loan originator agreement with each of the loan officers involved in
the 28 FHA loans reviewed. The agreement stated: “A+ Mortgage, Inc. is a Mortgage
Broker and Loan Originator is an Independent Contractor pursuant to
RCW19.146.010(7), and not an employee.” The A Plus loan officers were paid on a
commission-only basis as independent contractors and their income was reported at year-
end using IRS Form 1099.
Under HUD regulations, a lender must exercise control and responsible management
supervision over its home and branch office employees. HUD Handbook 4060.1, REV-2,
paragraph 2-9(D), requires that control and supervision include, at a minimum, regular
and ongoing reviews of employee performance and work performed. Since the loan
officers were independent contractors and not employees, A Plus did not have
12
supervisory control over the loan officers and could not document that the performance
of any of these loan officers had been reviewed.
A Plus Loan Officers Also
Worked for or Owned Other
Mortgage Firms
A Plus’s loan files contained indicators that the loan documents came from other lenders,
consultants, or real estate firms. For example, we found faxed loan documents containing
the fax numbers and names of the other firms. Further, the listing of branch offices on
the A Plus Web site contained e-mail addresses for “branches” that had other company
domain names. Examples of these domain names included a large real estate firm in the
Seattle, Washington, area and the names of other mortgage companies.
We performed Internet searches on some of the loan officers and found the following
instances of dual employment or ownership of other mortgage lenders:
FHA Loan Number 561-8301920
An Internet search on the loan officer’s name led to a Web page showing the loan officer
representing another non-approved lender located in Shoreline, Washington.
FHA Loan Numbers 561-8315516 and 562-2043697
The loan officer for these loans had a Web page identifying him as the owner/manager of
a non-FHA-approved mortgage company.
FHA Loan Numbers 561-8270484, 561-8270990, and 561-8304752
The loan officer for these loans was shown on a Web page identifying her as working for
a consulting firm in Tacoma, Washington. This firm specializes in obtaining home loans
for clients and helping clients build wealth.
We found that 15 of the 28 loans reviewed were originated by loan officers that were
employed by other mortgage or real estate firms (see appendix E). HUD Handbook
4060.1, REV-1, paragraph 2-14, and HUD Handbook 4060.1, REV-2, paragraphs 2-9 and
2-14, require that all loan officers be employed exclusively by only one lender at all times
and conduct only the business affairs of that lender. The handbook also prohibits loan
officers from working in any other capacity in the mortgage and/or real estate fields.
This prohibition includes working for any other lender and from working in the real
estate and/or escrow field.
13
Borrowers Were Not Always
Aware That A Plus Was the
Originating Lender
We interviewed the borrowers of three A Plus FHA loans and found that the loan
application process was conducted at locations that were not offices of A Plus and that
the borrowers were not always aware that A Plus was the originating lender.
For one loan, the borrowers told us that the FHA loan application was taken at the office
of a consulting and management firm in Tacoma, Washington that was not owned or
operated by A Plus. The person who signed the loan documents as a “loan officer” for A
Plus gave the borrowers a business card identifying her as an associate of the consulting
and management firm. The borrowers told us that this “loan officer” did not conduct the
initial loan application interview. The interview was conducted by the wife of the owner
of the consulting and management firm who was not an A Plus employee.
The borrowers of another A Plus loan told us that the entire loan application process was
conducted by their real estate agent at that agent’s office in Renton, Washington. The
borrowers also said that they did not realize that they were getting their loan through A
Plus. When shown the signature and name of the A Plus loan officer on the loan
documents, they stated that they did not meet with or know the person.
For another loan, the borrowers told us that it was not clear to them what role A Plus
played in their loan transaction because they did not go to any office of A Plus. They
noted that all of their meetings with the loan officer, including the closing of the FHA
loan, occurred either at their home or at the home of the loan officer.
Unauthorized Branches Are
Prohibited
HUD Handbook 4060.1, REV-2, paragraph 2-14 (A), states that an approved lender is
prohibited from engaging an existing, separate mortgage company or broker to function
as a branch of the approved lender and allowing that separate entity to originate insured
mortgages under the approved lender’s FHA number. Such an arrangement constitutes a
prohibited branch arrangement. Separate entities may not operate as branches or dba’s of
an FHA-approved lender. Paragraph 2-14 also prohibits certain employment agreements,
including a branch compensation plan that includes the payment of operating expenses by
the branch manager, any other employee, or a third party. This prohibition was
established in Mortgagee Letter 00-15.
14
A Plus Had Prohibited Branch
Arrangements
When our audit began in July of 2007, A Plus listed 50 branch office locations and one
home office on its Web site. It did not notify HUD of the existence of these branch
offices and did not receive HUD approval for originating and processing insured loans at
these branches. We were told by the president of A Plus that the contact person listed in
each branch office’s location information was also the branch manager of that office.
However, as noted above, the e-mail domain names for the branch managers sometimes
were the domain names of other mortgage or realty firms. Thus, these “branch offices”
appeared to be other entities not owned or operated by A Plus.
In addition, the agreement between the loan officers and A Plus stated that any error or
omission on the loan officer’s part, resulting in any monetary penalty to A Plus, was the
responsibility of the “loan originator” (i.e., loan officer) and would be charged to that
loan officer. The agreement further stated that the loan officer had no authority to
encumber A Plus for any financial obligations. If the loan officer ordered any services
without first obtaining the FHA borrower’s funds, that loan officer was responsible for
payment for those services if the FHA borrower did not pay for them. In effect, the
agreement created a prohibited branch arrangement between A Plus and the loan officer.
HUD Handbook 4060.1, REV-2, paragraph 2-8, also requires all HUD-approved lenders
to pay all operating expenses for its branch offices, including but not limited to
equipment, furniture, office rent, overhead, and employee compensation. Nonetheless,
the president of A Plus disclosed that his firm did not pay any of its branch office
expenses, and that the loan officers and supervisors earning commissions from loans
processed through A Plus paid their own expenses.
Conclusion
A Plus disregarded HUD requirements by allowing unsupervised independent contractors
and unapproved branches to originate FHA-insured loans. Without adequate control and
supervision over the loan originators, A Plus could not provide adequate assurance to
HUD that the loans were originated in accordance with applicable origination
requirements.
15
Recommendations
We recommend that the Assistant Secretary for Housing – Federal Housing
Commissioner require A Plus to
2A. Return all loan origination fees, totaling $32,036, to the borrowers on all loans
that were originated by third-party independent contractors, as shown at appendix
D.
2B. Only submit loans for FHA insurance that were originated by A Plus employees.
These employees must not have employment elsewhere in the mortgage lending
or real estate fields, must be under full supervisory control of A Plus, and must be
issued IRS Forms W-2 for any salary or commission earned on an insured loan.
2C. Register all of its branch offices with FHA. Expenses for operating these branch
offices must be paid by A Plus, not its employees or outside parties.
We also recommend that the Assistant Secretary for Housing – Federal Housing
Commissioner
2D. Refer A Plus Mortgage to the Mortgagee Review Board for consideration of
administrative sanctions and/or civil money penalties for the violations of HUD
requirements disclosed in this finding.
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SCOPE AND METHODOLOGY
Our objectives were to determine whether (1) the loan officers for the loans reviewed were
employees of A Plus and (2) the fees charged to FHA borrowers by A Plus were appropriate
under HUD, FHA, and RESPA regulations. The criteria for employees of a HUD-approved
lender and borrower costs that are acceptable to HUD FHA were found in 24 CFR Parts 202
through 206 and 3500; HUD Handbooks 4000.2, 4060.1, and 4155.1; HUD Policy Statements
1999-1 and 2001-1; and various HUD mortgagee letters.
During our audit period, A Plus originated 60 FHA loans. Of the 60 loans, 31 were active with
HUD paper case binders on file. We randomly selected 28 of these for review. Our audit was
limited to A Plus’s role in the origination of the 28 loans as an approved FHA loan
correspondent, and we did not perform a review of the underwriting of these loans.
Each case binder was examined to determine whether the documentation in the binder contained
indications that the loan officer involved was working for a business entity other than A Plus.
We also reviewed other documentation in the FHA case binders such as the HUD -1 settlement
statements to determine the amounts and distribution of any loan origination fees, loan discounts,
yield spread premiums, and other costs charged to the borrowers.
Our site work at A Plus’s main office in Tukwila, Washington, included a review of the loan and
employee documentation on file for the 28 loans. Documents reviewed included IRS Forms
1099, good faith estimates, final HUD-1 settlement statements, escrow instruction sheets, escrow
check copies, and A Plus disbursement checks that were issued from the proceeds of respective
escrow checks it received from the FHA loan transactions. While on site, we conducted
interviews with A Plus staff regarding the employment status of the loan officers and fees
collected by A Plus from the loan transactions.
For three of the loans reviewed, we conducted face-to-face interviews with the borrowers at the
borrowers’ residences. The purpose of these interviews was to determine how and where the
borrowers applied for their loans, whether they were aware of which mortgage company would
be originating their FHA loans, and whether they fully understood the costs involved in their
loans.
Our audit was conducted between July 18, 2007, and February 19, 2008. The audit period
covered was May 1, 2005, through May 31, 2007.
We performed our review in accordance with generally accepted government auditing standards.
17
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, and
• Compliance with applicable laws and regulations.
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:
• Originating and processing FHA-insured loans in accordance with HUD
requirements.
• Safeguarding the FHA insurance fund from unnecessary risk.
We assessed the relevant controls identified above.
A significant weakness exists if management controls do not provide reasonable
assurance that the process of planning, organizing, directing, and controlling program
operations will meet the organization’s objectives.
Significant Weaknesses
Based upon our review, we believe the following items are significant weaknesses:
• A Plus did not have adequate controls to ensure that it followed HUD
requirements when it originated FHA loans (findings 1 and 2).
• A Plus exposed the FHA insurance fund to unnecessary risk because it
allowed unsupervised nonemployees to originate FHA loans (finding 2).
18
APPENDIXES
Appendix A
SCHEDULE OF QUESTIONED COSTS
Recommendation number Ineligible 1/
1A $153,110
2A $32,036
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.
19
Appendix B
AUDITEE COMMENTS AND OIG’S EVALUATION
Ref to OIG Evaluation Auditee Comments
Comment 1
Comment 1
Comment 2
Comment 3
Comment 4
Comment 5
Comment 3
Comment 6
Comment 3
20
Comment 7
Comment 3
Comment 8
Comment 3
Comment 9
Comment 3
Comment 10
Comment 3
Comment 11
Comment 3
Comment 12
Comment 3
Comment 13
Comment 14
Comment 3
21
Comment 15
Comment 3
Comment 16
Comment 3
Comment 17
Comment 3
Comment 18
Comment 3
Comment 19
Comment 3
Comment 20
Comment 3
Comment 21
Comment 3
22
Comment 22
Comment 3
Comment 23
Comment 24
Comment 23
Comment 24
Comment 24
Comment 24
23
Comment 24
Comment 25
24
OIG Evaluation of Auditee Comments
Comment 1 HUD does not require lenders to disclose the exact yield spread premium until the
final HUD-1 is issued. It does require the lender to disclose estimates of costs,
including the yield spread premium to the borrowers within three days of the
receipt of the loan application. A Plus received yield spread premiums from its
sponsor lender for all 28 of the loans reviewed. The sponsor lender was the same
for 23 of the 28 loans reviewed and A Plus was receiving daily rate sheets from
this sponsor lender. Thus A Plus had sufficient information on hand to calculate a
reasonable estimate of the yield spread premium to disclose to the borrowers as
soon as the loan application was received.
Comment 2 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $3,978 ($935 loan origination fee plus
the $3,043 loan discount fee that was not passed through to the sponsor lender and
did not generate a commensurate benefit for the borrower), and represent 2.13
percent of the loan amount (net of the mortgage insurance premium). Regulations
at 24 CFR 203.27(a)(i) limit mortgagees to collecting from borrowers one percent
of the original principal amount, excluding the mortgage insurance premium, for
originating a loan.
Comment 3 According to records obtained from A Plus Mortgage, the discount fee charged to
the borrowers was not used to buy down the interest rate on the loan. A Plus
obtained the interest rate on the loan without having to pay the sponsor lender a
discount, and the borrower did not receive an interest reduction or other
commensurate benefit from the discount fee paid. The mortgage interest rate was
high enough to generate a yield spread premium paid to A Plus at the loan
closing. As noted in Finding 1, upon loan closing, A Plus received the loan
origination fee, loan discount, other fees and the yield spread premium from the
escrow settlement service in the form of a check. Upon receipt of this check A
Plus’ bookkeeper split the total amount of these funds between itself and the
independent contractor or unapproved branch that brokered the loan through A
Plus.
Comment 4 During the audit, A Plus was unable to explain what the $3,545 fee was for. Upon
receiving its response to the draft audit report, we asked A Plus for a copy of the
invoice to confirm that the fee was for the installation of the tie down system. A
Plus did not provide the invoice as requested.
Comment 5 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $3,926 ($1,457 loan origination fee
plus the $2,469 loan discount fee that was not passed through to the sponsor
25
lender and did not generate a commensurate benefit for the borrower), and
represent 2.70 percent of the loan amount (net of the mortgage insurance
premium). Regulations at 24 CFR 203.27(a)(i) limit mortgagees to collecting
from borrowers one percent of the original principal amount of the mortgage,
excluding the mortgage insurance premium, for originating a loan.
Comment 6 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $3,590 ($1,230 loan origination fee
plus the $2,360 loan discount fee that was not passed through to the sponsor
lender and did not generate a commensurate benefit for the borrower), and
represent 2.92 percent of the loan amount (net of the mortgage insurance
premium). Regulations at 24 CFR 203.27(a)(i) limit mortgagees to collecting
from borrowers one percent of the original principal amount of the mortgage,
excluding the mortgage insurance premium, for originating a loan.
Comment 7 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $4,068 ($1,995 loan origination fee
plus the $2,073 loan discount fee that was not passed through to the sponsor
lender and did not generate a commensurate benefit for the borrower), and
represent 1.99 percent of the loan amount (net of the mortgage insurance
premium). Regulations at 24 CFR 203.27(a)(i) limit mortgagees to collecting
from borrowers one percent of the original principal amount of the mortgage,
excluding the mortgage insurance premium, for originating a loan.
Comment 8 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $3,604 ($1,530 loan origination fee
plus the $2,074 loan discount fee that was not passed through to the sponsor
lender and did not generate a commensurate benefit for the borrower), and
represent 2.35 percent of the loan amount (net of the mortgage insurance
premium). Regulations at 24 CFR 203.27(a)(i) limit mortgagees to collecting
from borrowers one percent of the original principal amount of the mortgage,
excluding the mortgage insurance premium, for originating a loan.
Comment 9 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $3,730 ($1,665 loan origination fee
plus the $2,065 loan discount fee that was not passed through to the sponsor
lender and did not generate a commensurate benefit for the borrower), and
represent 2.24 percent of the loan amount (net of the mortgage insurance
26
premium). Regulations at 24 CFR 203.27(a)(i) limit mortgagees to collecting
from borrowers one percent of the original principal amount of the mortgage,
excluding the mortgage insurance premium, for originating a loan.
Comment 10 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $3,324 ($2,205 loan origination fee
plus the $1,119 loan discount fee that was not passed through to the sponsor
lender and did not generate a commensurate benefit for the borrower), and
represent 1.51 percent of the loan amount (net of the mortgage insurance
premium). Regulations at 24 CFR 203.27(a)(i) limit mortgagees to collecting
from borrowers one percent of the original principal amount of the mortgage,
excluding the mortgage insurance premium, for originating a loan.
Comment 11 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $3,357 ($1,400 loan origination fee
plus the $1,957 loan discount fee that was not passed through to the sponsor
lender and did not generate a commensurate benefit for the borrower), and
represent 1.74 percent of the loan amount (net of the mortgage insurance
premium). Regulations at 24 CFR 203.27(a)(i) limit mortgagees to collecting
from borrowers one percent of the original principal amount of the mortgage,
excluding the mortgage insurance premium, for originating a loan.
Comment 12 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $4,242 ($3,152 loan origination fee
plus the $1,090 loan discount fee that was not passed through to the sponsor
lender and did not generate a commensurate benefit for the borrower), and
represent 1.35 percent of the loan amount (net of the mortgage insurance
premium). Regulations at 24 CFR 203.27(a)(i) limit mortgagees to collecting
from borrowers one percent of the original principal amount of the mortgage,
excluding the mortgage insurance premium, for originating a loan.
Comment 13 According to records obtained from A Plus Mortgage, the entire discount fee
charged to the borrowers was not used to buy down the interest rate on the loan or
provide a commensurate benefit for the borrower. As noted in the table in
Finding 1 of this report showing loans with both loan discount fees and yield
spread premiums, A Plus collected a loan discount fee of $1,497 from the
borrower, but the borrower only received $746 of credits from A Plus. Upon loan
closing, A Plus received the loan origination fee, loan discount, other fees and the
yield spread premium (less the $746 of credits to the borrower) from the escrow
settlement service in the form of a check. Upon receipt of this check A Plus’
27
bookkeeper split the total amount of these funds between itself and the
independent contractor or unapproved branch that brokered the loan through A
Plus.
Comment 14 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $4,915 ($1,900 loan origination fee
plus the $495 broker processing fee plus the $2,520 loan discount fee that was not
passed through to the sponsor lender and did not generate a commensurate benefit
for the borrower), and represent 2.56 percent of the loan amount (net of the
mortgage insurance premium). Regulations at 24 CFR 203.27(a)(i) limit
mortgagees to collecting from borrowers one percent of the original principal
amount of the mortgage, excluding the mortgage insurance premium, for
originating a loan.
Comment 15 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $2,517 ($1,405 loan origination fee
plus the $1,112 loan discount fee that was not passed through to the sponsor
lender and did not generate a commensurate benefit for the borrower less a $79
credit to the borrower), and represent 1.73 percent of the loan amount (net of the
mortgage insurance premium). Regulations at 24 CFR 203.27(a)(i) limit
mortgagees to collecting from borrowers one percent of the original principal
amount of the mortgage, excluding the mortgage insurance premium, for
originating a loan.
Comment 16 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $2,135 ($1,045 loan origination fee
plus the $1,090 loan discount fee that was not passed through to the sponsor
lender and did not generate a commensurate benefit for the borrower), and
represent 2.04 percent of the loan amount (net of the mortgage insurance
premium). Regulations at 24 CFR 203.27(a)(i) limit mortgagees to collecting
from borrowers one percent of the original principal amount of the mortgage,
excluding the mortgage insurance premium, for originating a loan.
Comment 17 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $2,004 ($1,662 loan origination fee
plus the $831 loan discount fee that was not passed through to the sponsor lender
and did not generate a commensurate benefit for the borrower less a $489 credit to
the borrower), and represent 1.2 percent of the loan amount (net of the mortgage
28
insurance premium). Regulations at 24 CFR 203.27(a)(i) limit mortgagees to
collecting from borrowers one percent of the original principal amount of the
mortgage, excluding the mortgage insurance premium, for originating a loan.
Comment 18 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $2150 ($1,040 loan origination fee
plus the $1,110 loan discount fee that was not passed through to the sponsor
lender and did not generate a commensurate benefit for the borrower), and
represent 1.03 percent of the loan amount (net of the mortgage insurance
premium.
Comment 19 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $5,288 ($3,508 loan origination fee
plus the $1,780 loan discount fee that was not passed through to the sponsor
lender and did not generate a commensurate benefit for the borrower), and
represent 1.51 percent of the loan amount (net of the mortgage insurance
premium). Regulations at 24 CFR 203.27(a)(i) limit mortgagees to collecting
from borrowers one percent of the original principal amount of the mortgage,
excluding the mortgage insurance premium, for originating a loan.
Comment 20 Fees paid to A Plus by the borrower totaled $2,683 ($1,588 broker fee plus the
$1,095 loan discount fee that was not passed through to the sponsor lender and
did not generate a commensurate benefit for the borrower), and represent 2.11
percent of the loan amount (net of the mortgage insurance premium). Regulations
at 24 CFR 203.27(a)(i) limit mortgagees to collecting from borrowers one percent
of the original principal amount of the mortgage, excluding the mortgage
insurance premium, for originating a loan.
Comment 21 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
Fees paid to A Plus by the borrower totaled $3,264 ($2,174 loan origination fee
plus the $1,090 loan discount fee that was not passed through to the sponsor
lender and did not generate a commensurate benefit for the borrower), and
represent 1.5 percent of the loan amount (net of the mortgage insurance
premium). Regulations at 24 CFR 203.27(a)(i) limit mortgagees to collecting
from borrowers one percent of the original principal amount of the mortgage,
excluding the mortgage insurance premium, for originating a loan.
Comment 22 We did not report that the loan origination fee was excessive. We added this fee
to other fees (including the yield spread premium) collected by A Plus for
originating the loan, and showed the total as a percentage of the loan amount.
29
Fees paid to A Plus by the borrower totaled $2,111 ($1,016 loan origination fee
plus the $1,095 loan discount fee that was not passed through to the sponsor
lender and did not generate a commensurate benefit for the borrower), and
represent 1.05 percent of the loan amount (net of the mortgage insurance
premium.
Comment 23 HUD required the issuance of W-2 forms with the August 14, 2006 issuance of
Handbook 4060.1 REV-2. Mortgagee Letter 2006-30 states that HUD would not
begin monitoring the W-2 requirement until March 1, 2007. We removed the
reference to this requirement in the report since most of the loans reviewed were
originated before the W-2 requirement or during the transition period for
implementation of this requirement. Nonetheless, from the issuance of HUD
Mortgagee Letter 94-39 on August 9, 1994, through the current requirements of
HUD Handbook 4060.1, REV-2, HUD has required that loan officers originating
FHA-insured mortgages be employees of the approved lender as well as under the
lender’s exclusive control and supervision.
Comment 24 As noted in the report, for all 28 loans all of the loan officers signed agreements
with A Plus state that the loan officers were not employees of A Plus, but were
independent contractors. Also as noted in the report, the loan files contained
indications that the loan officers also represented other lenders, consultants, or
real estate firms. A Plus gave us no indication that it followed up with the loan
officers when these indications were present in the loan documentation.
Comment 25 As noted in Finding 2, borrowers told us that they did not realize that they were
obtaining a loan from A Plus Mortgage since the loans applications were
conducted at locations that were not A Plus Mortgage offices and the applications
were taken by persons working for other firms.
.
30
Appendix C
SCHEDULE OF EXCESS AND UNEARNED FEES
Yield Additional
Loan spread broker
FHA case no. discount fee premium fee Totals Notes
561-8275604 $3,043 $3,084 $3,545 $9,672
562-2046136 $2,469 $3,513 $5,982
561-8278635 $2,360 $2,497 $4,857
561-8292126 $2,073 $5,960 $8,033
562-2049727 $2,074 $3,882 $5,956
561-8308646 $2,065 $4,014 $6,079
561-8284753 $1,119 $6,155 $7,274
561-8282112 $1,957 $3,915 $5,872
561-8315965 $1,090 $7,599 $8,689
561-8161367 $1,497 $6,691 $8,188 1
561-8252480 $2,520 $2,170 $ 495 $5,185
561-8315516 $1,112 $2,317 $3,429 2
561-8304752 $1,090 $ 795 $1,885
561-8225722 $ 831 $2,531 $3,362 3
561-8298555 $1,110 $3,431 $4,541
561-8270990 $1,780 $4,005 $5,785
561-8295825 $1,095 $ 483 $1,588 $3,166
561-8270484 $1,090 $1,379 $2,469
562-2043697 $1,095 $1,016 $2,111
561-8301920 Seller Paid $5,136 $5,136
561-8208362 $ -0- $5,228 $5,228 4
561-8241617 $ -0- $5,052 $5,052
561-8286659 Seller Paid $3,756 $3,756
561-8279845 $ -0- $8,112 $1,120 $9,232
561-8323302 Seller Paid $3,471 $3,471
561-8252258 $ -0- $5,583 $1,090 $6,673
561-8303133 Seller Paid $9,463 Seller Paid $9,463
561-8287082 $ -0- $2,069 $ 495 $2,564
Totals $31,470 $113,307 $8,333 $153,110
Notes
1 $746 of the fees and other costs shown were applied to borrower costs at closing.
2 $79 of the fees and other costs shown were applied to borrower costs at closing.
3 $489 of the fees and other costs shown were applied to borrower costs at closing.
4 $1,839 of the yield spread premium was applied to borrower costs at closing.
31
Appendix D
SCHEDULE OF LOAN ORIGINATION FEES
FHA case no. Loan origination fee
561-8275604 $ 935
561-8278635 $1,230
561-8292126 $1,995
562-2046136 $1,457
562-2049727 $1,530
561-8308646 $1,665
561-8284753 $2,205
561-8282112 $1,400
561-8315965 $3,152
561-8161367 $ -0-
561-8252480 $1,900
561-8252258 $ -0-
561-8315516 $1,405
561-8304752 $1,045
561-8279845 $ -0-
561-8303133 Seller paid
561-8301920 Seller paid
561-8225722 $1,662
561-8298555 $1,040
561-8270990 $3,507
561-8286659 Seller paid
561-8295825 $ -0-
561-8208362 $ -0-
561-8241617 Seller paid
561-8270484 $2,174
561-8287082 $2,718
562-2043697 $1,016
561-8323302 $ -0-
Total $32,036
32
Appendix E
LOANS WITH INDICATIONS OF DUAL EMPLOYMENT OF
A PLUS LOAN OFFICERS AND SUPERVISORS
FHA case no. A Plus job title Dual employment details
561-8304752 Loan officer and Representing and doing business as a consulting
561-8270990 supervisor and management firm. Supervisor also had
561-8284753 second company (along with spouse) - T.A.
561-8270484 Paige, Inc., in A Plus information.
561-8315516 Loan officer and Supervisor was owner of his own mortgage
561-8278635 supervisor company, evident in A Plus file and in the e-mail
562-2043697 address for “branch” contact where loan officer
works.
562-2049727 Supervisor Owner of a company in the mortgage finance
562-2046136 industry.
561-8308646 Loan officer and Did not interview borrowers in A Plus office and
supervisor closed loan in supervisor’s home.
561-8301920 Loan officer Loan officer with another non-approved lender
per information in A Plus loan file and Internet
site.
561-8275604 Loan officer and Loan officer/supervisor (same person) had her
supervisor business card in the A Plus loan file from
another non-approved lender.
561-8295825 Loan officer and Loan officer/supervisor (same person) worked
supervisor for another non-approved lender, which is in A
Plus “branch” information.
561-8225722 Loan officer Loan officer registered in Washington State with
another non-approved lender, which was on
borrower’s credit report in A Plus loan file.
561-8303133 Loan officer and Loan officer/supervisor (same person) did not
supervisor work with the borrowers per our interview.
Realtor did the bulk of processing on this loan.
33
A Plus Mortgage Inc., Tukwila, WA, Overcharged Borrowers and Allowed Independent Contractors and Unapproved Branches to Originate Loans
Published by the Department of Housing and Urban Development, Office of Inspector General on 2008-05-07.
Below is a raw (and likely hideous) rendition of the original report. (PDF)