FHA suspends mortgage wholesaler

The Federal Housing Administration (FHA) suspended a Florida-based mortgage wholesaler from underwriting FHA-insured mortgages, due to its failure to submit to a required audit and "certain irregular transactions that raised concerns of fraud."

FHA’s suspension is also based on the mortgage company’s failure to disclose, and its false certifications concealing, that it was the subject of two examinations into its business practices in the past year.

The Federal Bureau of Investigations raided the company’s Florida offices and the suspension could hurt hundreds of mortgage brokers and community banks that originate loans through the company, the Wall Street Journal reported.

"Today, we suspend one company but there is a very clear message that should be heard throughout the FHA lending world – operate within our standards or we won’t do business with you," said Housing and Urban Development Secretary Shaun Donovan, whose department oversees FHA.

FHA Commissioner David Stevens said the company was a target of a multi-state examination and a separate action by the Commonwealth of Kentucky, but falsely certified that it had not been sanctioned by any state.

The immediate suspension is for a temporary period pending the completion of an investigation and any legal proceedings that may ensue.

The company is the third largest direct endorsement lender of FHA-insured loans and the eighth largest issuer of Ginnie Mae mortgage-backed securities.