Posted on Tuesday, September 14, 2010
The Federal Housing Administration (FHA) has failed to root out several executives with criminal records whose firms continue to do business with the agency in violation of federal law, according to the Center for Public Integrity, a nonprofit investigative organization focused on public policy issues.
Based on HUD and FHA documents, as well as court records and interviews, the Center found that at least five
convicted felons are now working for FHA lenders or worked for them in recent years.
The Center says “the agency’s get-tough campaign against bad actors remains hamstrung.” The reason, according to the nonprofit group, is because even when the FHA can ban mortgage companies for wrongdoing or an excessive default rate, it does not have the legal power to stop their executives from landing jobs at other lenders, or from opening new firms.
The Center’s investigation revealed that more than 34,000 home loans have been issued over the past two years by a dozen FHA-approved lenders that have employed people who were convicted of felonies, banned from the securities industry, or previously worked for firms barred by the agency.
More than 3,000 of those loans, about 9 percent, were seriously delinquent or already in the FHA insurance fund claim process as of June 30. According to the Center, that’s nearly triple the rate for all loans made by FHA lenders over the past two years.-DSNews