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We completed a review of First Source Financial USA (First Source), a former nonsupervised loan correspondent approved to originate FHA-insured loans. The objective was to determine whether First Source originated FHA loans and had a quality control plan that complied with HUD rules and regulations. We reviewed 20 loans amounting to more than $2.5 million that were in claim status. Our review disclosed that First Source: (1) allowed nonemployees and unapproved branches to originate and process FHA loans; (2) originated and processed FHA loans with false information and known misrepresentations; and (3) allowed questionable lending practices by collecting unearned fees. We recommended civil money penalties, debarments, and repayment of $159,663 in losses HUD incurred on six of the loans. Based on our review, HUD’s Office of General Counsel initiated administrative sanctions under the Program Fraud Civil Remedies Act of 1986. To date, this action has resulted in several judgments totaling $635,498 and other settlements totaling $340,000, as well as other sanctions that remain in process at the time of this report.