oversight

American Midwest Mortgage Corporation Settled Allegations of Failing To Comply With Federal Housing Administration Underwriting Requirements

Published by the Department of Housing and Urban Development, Office of Inspector General on 2016-09-23.

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

                                                U.S. DEPARTMENT OF
                               HOUSING AND URBAN DEVELOPMENT
                                         OFFICE OF INSPECTOR GENERAL




                                           September 23, 2016
                                                                                              MEMORANDUM NO:
                                                                                              2016-CF-1808



Memorandum
TO:           Dane M. Narode
              Associate General Counsel, Office of Program Enforcement, CACC

              //signed//
FROM:         Christeen Thomas
              Director, Joint Civil Fraud Division, GAW

SUBJECT:      Final Civil Action: American Midwest Mortgage Corporation Settled Allegations
              of Failing To Comply With Federal Housing Administration Underwriting
              Requirements


                                           INTRODUCTION

The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General
(OIG), assisted HUD’s Office of Program Enforcement in the civil investigation of American
Midwest Mortgage Corporation. American’s principal place of business is located in Cleveland,
OH.

                                             BACKGROUND

The Federal Housing Administration (FHA) is a component of HUD. It provides mortgage
insurance for a person to purchase or refinance a principal residence. The mortgage loan is
funded by a lending institution, such as a mortgage company or bank, and the mortgage is
insured by FHA.

American became an FHA-approved direct endorsement lender on August 28, 1983. The direct
endorsement lender program authorizes private-sector mortgage lenders to approve mortgage
loans for insurance by FHA. Lenders approved for the program must follow various FHA
requirements and provide annual and per loan certifications that the lender complied with these
requirements when underwriting and approving loans for FHA insurance.



                                               Joint Civil Fraud Division
                                400 State Avenue, Suite 501, Kansas City, KS 66101
                          Visit the Office of Inspector General Web site at www.hudoig.gov.
                                       RESULTS OF INVESTIGATION

Based in part on OIG’s review, on December 11, 2015, HUD notified American that it believed
American was liable under the Program Fraud Civil Remedies Act of 1986, 31 U.S.C. (United
States Code) 3801-3812, 1 for submitting false claims, false statements, or both, associated with
FHA-insured loan transactions.

On April 7, 2016, to avoid the uncertainty of litigation, the parties entered into a settlement
agreement related to five FHA-insured mortgage transactions that failed to meet HUD
underwriting requirements. American agreed to make two payments to HUD totaling $110,000
– $75,000 at the time of the agreement and $35,000 within 60 days following the effective date
of the agreement. American made the final payment of $35,000 on June 6, 2016.

                                          RECOMMENDATION

We recommend that HUD’s Office of General Counsel, Office of Program Enforcement,

1A.     Acknowledge that the attached settlement agreement for $110,000 represents an amount
        due HUD.

As of the date of this memorandum, the settlement amount due HUD had been paid in
full. Therefore, no further action is required by the Office of General Counsel. At issuance of
this memorandum, HUD OIG will enter a management decision into HUD’s Audit Resolution
and Corrective Action Tracking System, along with the supporting payment information to show
that final action was completed.




1
 The Program Fraud Civil Remedies Act establishes remedies for false statements and false claims valued at
$150,000 or less that are submitted to the Federal Government or to intermediaries of the Government.

                                                        2