Premium Capital Funding, LLC, Jericho, New York, a lender doing business as TopDot Mortgage, has had its FHA approval withdrawn by the Federal Housing Administration’s Mortgagee Review Board (MRB). This action prevents TopDot from participating in FHA programs and seeks a monetary penalty of $674,000.
In addition, the Government National Mortgage Association (Ginnie Mae) is defaulting and terminating TopDot as an issuer in its Mortgage-Backed Securities (MBS) program and is ending the Company’s ability to continue to service Ginnie Mae securities. Servicing of TopDot’s $181.2 million dollar Ginnie Mae portfolio will be transferred to LoanCare Servicing Center, Inc.
The MRB and Ginnie Mae took these actions based upon TopDot’s numerous and egregious violations of FHA requirements, including failure to document borrowers’ income, evaluate borrowers’ creditworthiness, and approving loans with grossly excessive debt-to-income ratios without compensating factors to justify approval.
“This lender demonstrated a pattern of utter disregard for how we do business and its behavior not only put the FHA insurance fund at risk, but placed their own customers at greater risk of foreclosure,” said FHA Commissioner David Stevens. “FHA approval is a privilege that we entrust to the most responsible lenders. If any lender violates that trust, the MRB will take action to protect borrowers, the FHA insurance fund and FHA programs.”
Mary Kinney, Ginnie Mae’s Executive Vice President, said “Ginnie Mae’s requirements are in place to protect the borrower and the American taxpayer. Both, Ginnie Mae and FHA are working aggressively to ensure that borrowers are not harmed by the misdeeds of lenders. These lenders are on notice that they must strictly adhere to Ginnie Mae and FHA regulations to maintain their status within HUD programs.”
While TopDot may appeal FHA’s withdrawal by submitting a written request for a hearing before an Administrative Law Judge within 30 days, the filing of an appeal does not delay the actions announced. A complaint seeking civil money penalties will be served on TopDot in due course and the Company will have the opportunity to contest the imposition of the penalties before an Administrative Law Judge.
The U.S. Department of Housing and Urban Development (HUD) is also continuing to evaluate the conduct of individuals who participated in TopDot’s violations of FHA requirements and will move quickly to take appropriate action against those individuals.
If TopDot is your mortgage company, see HUD’s website for more information about the status of your loan and the next steps for borrowers. FHA and Ginnie Mae have taken several steps to minimize the disruption to borrowers whose loans are serviced by TopDot and are committed to protecting all FHA-insured borrowers and the American taxpayer.