The Department of Housing and Urban Development (HUD) is asking Ameritrust Mortgage Bankers to indemnify the Federal Housing Administration (FHA) for possible future losses on 10 loans and reimburse the agency $183,327 for actual losses on at least one mortgage.
HUD's Office of Inspector General (OIG) audited 20 loans originated by the Lake Success, N.Y.-based lender, discovering "material underwriting deficiencies" on 11 of the loans, including inadequacies tied to income, assets, liabilities and the credit history of the borrowers.
In one transaction, the borrower was 30-days or more late on his mortgage payments six times in a 12-month period and had skipped three-monthly payments.
OIG auditors said the borrower was not eligible for a cash-out refinancing. "Consequently, Ameritrust officials should not have approved the loan,” the OIG said.
It is customary for an audited lender to respond in writing to an Inspector General audit, but Ameritrust's executives “chose not to provide written comments," the OIG auditors said.
Several telephone calls to Ameritrust made by National Mortgage News were not returned. As of late Monday, the company's main voice mail system was not accepting new messages. CEO, David Bahkshi, did not respond to a message left in his voice mail.
An Ameritrust official told the OIG auditors back in May that the mortgage bank was ceasing operations. But a HUD spokesman said the agency's records show that Ameritrust is an "active" lender. One source told NMN that Ameritrust originated 17 FHA-insured loans in June.
OIG generally initiates audits of FHA-approved lenders because they have a high seriously delinquency (90 days or more past due) and/or a high claim rate.
Ameritrust had an 8.9% serious delinquency and claims rate on 570 loans it originated during a two-year period ending Oct. 3, 2010.
HUD OIG estimated that FHA could suffer losses of up to $2.9 million on the 10 loans cited in its findings. (The loss rate would be 54% on a UPB of $4.65 million.)
OIG issued the audit report on Aug. 16. FHA is reviewing the recommendations. "Our management decision is pending completion of our review of the report," the HUD spokesman said.