The U.S. Department of Housing and Urban Development (HUD) has suspended Michael Primeau, former President of Lend America, from doing any business with HUD following his admission that he engaged in a wide-scale mortgage fraud scheme.
“We take this action to protect the public,” said HUD’s General Counsel Helen Kanovsky. “Beyond this particular suspension, the broader message to the lending community should be crystal clear – the federal government will not do business with those who fleece homeowners.”
The “fleece” that Kanovsky refers to is the scheme Primeau concocted while President of Lend America, a former FHA-approved lender. Primeau directed employees of Lend America to divert mortgage funds intended to pay off borrowers’ first mortgages at refinance closings in order to pay company operating expenses.
Primeau just pled guilty to the scheme, which offered repeated violations of the Federal Housing Administration’s (FHA) origination and underwriting requirements, including submitting false certifications and failing to document borrower income and creditworthiness.
As a consequence, HUD has withdrawn the company’s FHA approval, preventing Lend from originating and underwriting new FHA-insured mortgages or from participating in the FHA single family insurance program. In addition, the Government National Mortgage Association (Ginnie Mae) terminated Lend America as an issuer and seized its portfolio.
“We have no tolerance for lenders who abuse their FHA-approval,” said FHA Commissioner David Stevens. “The evidence in this case points to a disturbing pattern of senior officials and underwriters, either not knowing what they were doing, or not caring. Therefore, Ideal has been immediately withdrawn from participating in the FHA-insured mortgage program.”