We investigated allegations that the president of a Federal Housing Administration (FHA)-approved lender violated loan origination requirements under the U.S. Department of Housing and Urban Development (HUD), FHA insurance program. The allegations were that although the loan application showed the lender’s president as the loan officer who originated the loan, it was actually originated by an employee of the lender, who was also the seller. The undisclosed identity of interest between the lender and the seller (the lender’s employee) allegedly violated HUD’s identity of interest requirements. Therefore, the loan did not qualify for FHA insurance. We referred our findings to HUD for action. In May 2014, HUD issued a complaint to the lender’s president, which alleged he was liable for civil penalties for causing a false statement to be made to HUD. To resolve the matter and to avoid the expense and uncertainty of litigation, HUD accepted a settlement payment of $750.
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