HUD to Collect Largest Amount Ever in Agency's 30-year History of Mortgagee Review Board

WASHINGTON – HUD has reached a “landmark” settlement with KB Home Mortgage Company in connection with a series of alleged violations of HUD requirements. The agency will collect $3.2 million – the largest amount ever collected in the 30-year history of HUD’s Mortgagee Review Board which takes administrative actions against FHA-approved lenders. The 13 alleged violations by KB Home Mortgage Company involve a number of poor underwriting practices such as approving loans to borrowers who weren’t eligible; approving loans based on overstated or incorrect income; failing to include all of the borrowers’ debts; failing to properly verify sources of funds; and failing to ensure gift letters met HUD requirements. Commenting on the landmark settlement, Mortgagee Review Board Chairman Brian Montgomery, Assistant Secretary for Housing-Federal Housing Commissioner said the settlement “sends a strong message that FHA will not tolerate violations of its requirements, especially when they can cause homeowners to default on their mortgages.” In addition to Montgomery, the other HUD officials on the Mortgagee Review Board are HUD’s General Counsel, the President of Ginnie Mae, HUD’s Chief Financial Officer, HUD’s Assistant Secretary for Administration, and the Director of the Enforcement Center. In cases involving discrimination, the agency’s Assistant Secretary for Fair Housing and Equal Opportunity also participates.