Lend America, the embattled Long Island-based Federal Housing Administration (FHA) lender, said it has halted all loan production, a move that comes less than 24 hours after the government ordered the nonbank to cease underwriting and funding government-backed products.
At press time, the company was in the process of laying off a large portion of its 600-person workforce, a source familiar with the matter said.
Also, mortgage officials familiar with the company said it is weighing its options, including a possible bankruptcy filing. A spokesman for Lend America said he could not comment on layoffs or the firm's bankruptcy options.
Late Monday, FHA ordered Lend America and its affiliates to immediately halt the origination and underwriting of all government-backed loans, citing numerous violations, including the paying of "excessive" fees to mortgage brokers. As part of the same set of sanctions against the Long Island-based nonbank, the Government National Mortgage Association declared Lend America in default as a servicer.
As reported by National Mortgage News a few weeks ago, Lend America this summer was actively trying to sell its $1 billion servicing portfolio. However, the sale never came off.
Lend America has roughly 30 days to challenge FHA's sanctions. The lender said it is "currently reviewing all possible options and remedies in response to this action, and will respond shortly once a decision has been reached."
The company is controlled by Michael Ashley, who back in 1993 pleaded guilty to three counts of conspiracy to commit wire fraud while employed by Liberty Mortgage Banking. Meanwhile, federal prosecutors in the Eastern District of New York are pursuing a civil fraud case against Ashley and Lend America, alleging at least 40 instances of mortgage fraud.
Meanwhile, federal prosecutors in the Eastern District of New York are pursuing a civil fraud case against Ashley and Lend America, alleging at least 40 instances of mortgage fraud.