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Ginnie Mae's Troubled Issuers

December 9, 2009
A review of government records, court documents, and U.S. Department of Housing and Urban Development statistics raises questions about why some mortgage firms have won Ginnie Mae's endorsement — and the guarantee of U.S. taxpayer money. Read the Center's story, which was a collaboration with The Washington Post.

Below you will find a list of troubled lenders identified by the Center. The list and the bar graph at the top of the page are initially sorted by the lenders' compare ratios.

Compare ratio is the comparison of a lender's default rates with other lenders in a geographic region as defined by HUD. For example, if a lender has a compare ratio of 200 percent, the Federal Housing Administration loans made by that lender are defaulting at twice the rate of its competitors in its geographic region. A compare ratio of 200 percent or more is grounds for suspension and a compare ratio of 150 percent or more indicates "a problem" lender, according to FHA Commissioner David Stevens.

Compiled by Brian Grow/The Center for Public Integrity. Produced by Erik Lincoln/The Center for Public Integrity. Center staff Kat Aaron, Laura Cheek, Joe Eaton, Caitlin Ginley, Josh Israel, Aaron Mehta, and Nick Schwellenbach also contributed to this report.
Hover your mouse over a bar for lender information. Click and drag the slider in the bottom left corner to scroll through the lenders.
Issuer*
Compare Ratio**
FHA Default Rate***
Issuance Volume****
Table is resortable by clicking on column headers.
Pine State Mortgage Corporation
314%
18.86%
$0
Click for moreClick to close
Default Rate Notes: 595 of 3,154 loans in default

Compare Ratio by Quarter

Documents

HUD regulatory actions: HUD Audit, November 2006, recommended indemnification for 21 improperly underwritten loans, Document

Company Response

Bob Motley, chairman of Pine State Mortgage Corp., says Ginnie Mae had approved the company to issue securities before the HUD audit occurred. But he says Ginnie Mae then declared the company inactive in 2007 for not issuing any securities. He says the audit played no role in Ginnie's decision.
Premium Capital Funding, LLC dba Topdot Mortgage
238%
14.31%
$78M
Click for moreClick to close
Default Rate Notes: 1,015 of 7,094 loans in default

Compare Ratio by Quarter

Documents

State regulatory actions: Indiana Dept. of Banking, January 2009, consent agreement, fine and temporary loss of license for not having a registered principal manager:Document

Company Response

Andrew Pennacchia, vice president of legal affairs at Premium, said Ginnie Mae has not raised concerns about the company's FHA default rate
Ideal Mortgage Bankers, Ltd, dba Lend America^
235%
14.14%
$1.23B
Click for moreClick to close
Compare Rate Notes: 2 of 3 branches with +225% compare ratio
Default Rate Notes: 1,634 of 11,559 loans in default; 2 of 3 branches with +14% default rate

Compare Ratio by Quarter

Documents

HUD regulatory actions: HUD Mortgage Review, Dec. 2008, six months probation for misleading ads: Document
State regulatory actions: Connecticut Dept. of Banking cease and desist order, October 2009, for failure to pay off prior mortgage; Document
Federal regulatory actions: Dept of Justice complaint, October 2009, U.S. District Court for the Eastern District of New York, alleging FHA mortgage fraud, case: United States v. Ideal Mortgage Bankers

Company Response

John Lovallo, a Lend America spokesman, said the company declined to comment
IndyMac FSB, dba OneWest Bank
211%
12.67%
$1.05B
Click for moreClick to close
Default Rate Notes: 576 of 4,546 loans in default

Compare Ratio by Quarter

Documents

Federal regulatory actions: Closed by OTS/FDIC, July 2008, Document

Company Response

Diane Henry, a spokeswoman for OneWest Bank, said in an email response, "OneWest Bank is a newly approved Ginnie Mae issuer. We purchased the legacy IndyMac Ginnie Mae servicing porfolio from the FDIC."
First Horizon Home Loans dba First Tennessee
207%
12.45%
$6.53B
Click for moreClick to close
Default Rate Notes: 1,939 of 15,549 loans in default (dba, First Tennessee Bank)

Compare Ratio by Quarter

Documents

HUD regulatory actions: HUD Audit, January 2003, recommended indemnification for 423 loans worth more than $40 million, Document
Other regulatory actions: Class-action settlement, February 2007, for improper loan origination fees, amount $36.3, Document

Company Response

Anthony Hicks, a spokesman for First Horizon, said in an email, "Beyond regulatory filings, particulars of business relationships maintained by First Horizon are confidential."
First American Mortgage Trust
205%
12.31%
$179M
Click for moreClick to close
Default Rate Notes: 24 of 195 loans in default

Compare Ratio by Quarter

Documents

State regulatory actions: New Hampshire State Banking Department, consent order, October 2009, fined and sanctioned for improper fees, Document

Company Response

Barry Polack, chief executive of First American Mortgage Trust, says the company disagreed with the New Hampshire consent order but decided to settle the case rather than take the cost of hiring a lawyer. Polack did not know whether the consent order had been disclosed to Ginnie Mae. "We have a good working relationship with Ginnie Mae," says Polack. "As far as I know, we are in compliance with all of our regulatory requirements."
First Guaranty Mortgage Corp.
204%
12.26%
$494M
Click for moreClick to close
Default Rate Notes: 371 of 3,026 loans in default

Compare Ratio by Quarter

Documents

State regulatory actions: New Jersey State Banking Division, consent order, August 2008, penalty and refund of $12,505 for improper commitment fees, Document

Company Response

First Guaranty did not respond to requests for comment
American Financial Resources, Inc.
202%
12.16%
$345M
Click for moreClick to close
Default Rate Notes: 304 of 2,500 loans in default

Compare Ratio by Quarter

Documents

State regulatory actions: Kentucky Office of Financial Institutions, August 2009, agreed order, fined for employing an unlicensed broker, Document

Company Response

Richard Dubnoff, chief executive of American Financial Resources, says "We work diligently to make sure we are compliant in every way." He says the Kentucky regulatory action was the result of one employee temporarily lacking a license. He adds that American Financial Resources' FHA default rate is 7.14% when accounting for retail and wholesale loans.
Weststar Mortgage Corporation
198%
11.88%
$31M
Click for moreClick to close
Default Rate Notes: 133 of 1,120 loans in default

Compare Ratio by Quarter

Documents

HUD regulatory actions: HUD Mortgagee Review, August 2008, $50,000 payment to HUD, refund of $28,790 and indemnification for extensive underwriting violations, Document

Company Response

Weststar did not respond to requests for comment
Gateway Mortgage Group
198%
11.9%
$96M
Click for moreClick to close
Default Rate Notes: 342 of 2,875 loans in default

Compare Ratio by Quarter

Documents

State regulatory actions: Illinois State Division of Banking, license revoked, November 2008 for alleged real estate and appraisal fraud; Document; Consent Order, June 2009, including one-year probation, $10,000 fine, Document

Company Response

Kevin Stitt, president of Gateway Mortgage, says the company was approved to issue Ginnie Mae securities before the Illinois regulatory action. He said he did not know if the company was required to disclose the action to Ginnie Mae. He said the company's Ginnie Mae approval status remains unchanged.
Colonial Bank
189%
11.38%
$575M
Click for moreClick to close
Default Rate Notes: 773 of 6,792 loans in default

Compare Ratio by Quarter

Documents

State regulatory actions: Closed by FDIC and Alabama State Banking Department, August 2009, Document

Company Response

Cynthia Williams, a spokeswoman for BB&T, which acquired the branches and deposits of Colonial Bank in August, says BB&T has its own Ginnie Mae approval status and did not acquire Colonial Bank's, which was held by Colonial BancGroup, the holding company. Colonial BancGroup filed for bankruptcy in August.
MVB Mortgage Corporation
183%
11.01%
$199M
Click for moreClick to close
Default Rate Notes: 62 of 563 loans in default

Compare Ratio by Quarter

Documents

Federal regulatory actions: FDIC cease and desist order, April 2007, alleged Miami Valley Bank improperly acquired loans from affiliated-entity MVB Mortgage Document

Company Response

MVB president Mary Ann Tomczyk says Ginnie Mae officials have not been concerned about the FDIC cease-and-desist order, which is the subject of an ongoing FDIC investigation and a federal lawsuit. But Tomczyk said Ginnie Mae last year required the company to lower its FHA default rate to 7.5 percent and capped the volume of securities MVB can issue at $5.5 million per month.
GMAC Mortgage
171%
10.29%
$30.84B
Click for moreClick to close
Default Rate Notes: 1,806 of 17,554 loans in default

Compare Ratio by Quarter

Documents

Federal regulatory actions: Federal Reserve Supervisory Capital Assessment Program, May 2009, Document
Other regulatory actions: Financial Services Authority, UK, GMAC fine of 2.8 million GBP for improper fees, October 2009, Document

Company Response

Jeannine Bruin, a spokeswoman for GMAC says, "GMAC disagrees with the characterization of the data. The compare ratio displayed in this report is applicable to between $4-5 billion of our government originations, a small fraction of our overall volume, and primarily from storefront and wholesale channels which we exited in September 2008. The compare ratio on our total government originations across all channels is significantly closer to industry average."
Allied Home Mortgage Corporation
168%
10.09%
$60M
Click for moreClick to close
Default Rate Notes: 2,123 of 21,050 in default

Compare Ratio by Quarter

Documents

HUD regulatory actions: HUD Audit, Feb 2009, recommended changes to policies and Mortgage Review Board pursue civil money penalties: Document HUD Audit, 2005, recommended $123,000 indemnification, Document
State regulatory actions: Kentucky Office of Financial Institutions, September 2009, agreed order, fine and voluntary contribution for not acting in best interest of borrower, Document

Company Response

Anthony Musgrave, general counsel for Allied Home Mortgage Corporation, says HUD and state regulatory actions relate to a separate retail lending affiliate, Allied Home Mortgage Capital Corporation, which does not have Ginnie Mae approval. "Anything that is required to have been disclosed is disclosed," says Musgrave, who is also general counsel for Allied Home Mortgage Capital Corp. Musgrave says the Ginnie Mae-approved sister entity, Allied Home Mortgage Corp., buys closed mortgage loans and pools them as Ginnie Mae securities.
Taylor Bean & Whitaker Mortgage^
163%
9.77%
$23.69B
Click for moreClick to close
Default Rate Notes: 453 of 4,635 loans in default

Compare Ratio by Quarter

Documents

State regulatory actions: June 2009: 14 state settlement agreement for alleged mortgage lending violations, Document

Company Response

Taylor Bean & Whitaker filed for bankruptcy protection in August. A Taylor Bean lawyer could not be reached for comment, despite several attempts
Shore Financial Services, Inc. dba Shore Mortgage
159%
9.54%
5
Click for moreClick to close
Default Rate Notes: 306 of 3,209 loans in default-

Compare Ratio by Quarter

Documents

HUD regulatory actions: HUD Mortgagee Review, April 2007, $29,500 fine and indemnification, Document

Company Response

Shore Financial Services did not respond to requests for comment
Real Estate Mortgage Network Inc.
139%
8.34%
$225M
Click for moreClick to close
Default Rate Notes: 256 of 3,070 loans in default

Compare Ratio by Quarter

Documents

State regulatory actions: Pennsylvania Dept. of Banking, October 2005, consent agreement, use of unlicensed mortgage brokering offices, Document

Company Response

Grace Currid, REMN's national operations manager, says the consent agreement occurred before REMN received Ginnie Mae approval and has not affected the company's status; she says the consent agreement was not disclosed to Ginnie Mae because the company determined it was not required by the Ginnie Mae application
DHI Mortgage Company, LTD.
121%
7.27%
$0
Click for moreClick to close
Default Rate Notes: 1,024 of 14,089 loans in default

Compare Ratio by Quarter

Documents

HUD regulatory actions: HUD Audit, September 2009, found violations, recommended $38 million indemnification: Document

Company Response

Jessica Hansen, a DHI Mortgage spokeswoman, referred reporters to the company's response to the HUD Audit. DHI disagreed with substantial elements of the audit, but agreed that HUD identified some weaknesses in its mortgage operations.
Freedom Mortgage Corporation
115%
6.89%
$6.78B
Click for moreClick to close
Compare Rate Notes: 10 of 27 active branches with +200% compare ratio
Default Rate Notes: 489 of 7,102 loans in default; 12 of 27 active branches with default rate +10%

Compare Ratio by Quarter

Documents

State regulatory actions: Connecticut Department of Banking, March 2009, settlement agreement, imposed $43,000 voluntary contribution and sanctions for allegedly employing 43 unlicensed brokers, Document Washington State Department of Financial Institutions, March 2009, consent order, imposed $33,000 fine, investigations fees, and restitution to borrowers for improper fees, consent order: Document; prior notice of intent to revoke license, impose restitution, Document

Company Response

Stanley C. Middleman, president of Freedom Mortgage, said the issues in Washington state and Connecticut "were not true regulatory actions but were rather the result of examinations conducted in the regular course of business." Middleman said there was no admission of liability in either case. "Under these circumstances, there was no need to report anything of this nature to Ginnie Mae."
Eagle Home Mortgage, LLC
101%
6.08%
$0
Click for moreClick to close
Default Rate Notes: 121 of 1,989 loans in default

Compare Ratio by Quarter

Documents

HUD regulatory actions: HUD Audit, July 2009, found company did not always follow HUD underwriting guidelines, recommended indemnification/reimbursement for three loans, Document

Company Response

Eagle Home Mortgage did not respond to requests for comment
Flagstar Bank, FSB
100%
6%
$16.54B
Click for moreClick to close
Default Rate Notes: 1,289 of 21,479

Compare Ratio by Quarter

Documents

HUD regulatory actions: HUD Audit, March 2005, recommended indemnification of two loans for $251,000, and recommended, if legally sufficient, pursuit of civil fraud remedies for improper escrow accounting: Document

Company Response

Flagstar Bank declined to comment.
New South Federal Savings Bank
96%
5.78%
$622M
Click for moreClick to close
Default Rate Notes: 353 of 6,108 loans in default

Compare Ratio by Quarter

Documents

Federal regulatory actions: OTS cease and desist order, May 2009:Document; OTS Prompt Corrective Action Directive, November 2009, Document

Company Response

William Ratliff III, president of New South Federal Savings Bank, said, "We actually notified (Ginnie Mae) that (the OTS cease and desist order) was going to be taking place before it became public." Chief financial officer Roger Murphree said the cease and desist did not effect NSFSB's ability to issue securities, but the bank must regularly update Ginnie Mae on its financial condition.
Guild Mortgage Company
71%
4.27%
$1.51B
Click for moreClick to close
Compare Rate Notes: 4 of 48 active branches with +200% compare ratio
Default Rate Notes: 328 of 7.690 loans in default; 5 of 48 active branches with +10% default rate

Compare Ratio by Quarter

Documents

HUD regulatory actions: HUD Audit, July 2004, found predatory lending, manipulation of HUD guidelines, recommended $159 million indemnification, Document

Company Response

Mary Ann McGarry, president of Guild Mortgage, did not respond to requests for comment
First Eastern Mortgage Corporation
65%
3.92%
$0
Click for moreClick to close
Default Rate Notes: 27 or 688 loans in default

Compare Ratio by Quarter

Documents

HUD regulatory actions: HUD Mortgagee Review, August 2003, fined $171,000 and indemnified 43 loans, Document

Company Response

First Eastern Mortgage did not respond to requests for comment
Regions Bank
54%
3.24%
$1.94B
Click for moreClick to close
Default Rate Notes: 489 of 15,084 loans in default

Compare Ratio by Quarter

Documents

Federal regulatory actions: SEC cease and desist and fine for securities fraud, September 2009, Document

Company Response

Tim Deighton, a spokesman for Regions Bank, said the SEC action was a matter of public record and "centered around the practices of a Regions customer." He said the company cooperated with the SEC and, "in the settlement, we did not admit or deny any allegations."
Homestreet Bank
48%
2.86%
$934M
Click for moreClick to close
Default Rate Notes: 69 of 2,411 loans in default

Compare Ratio by Quarter

Documents

Federal regulatory actions: FDIC/Washington State DFI cease and desist order for unsafe banking practices, May 2009:Document

Company Response

Homestreet Bank declined to comment.
Peoples First Community Bank
48%
2.91%
$0
Click for moreClick to close
Default Rate Notes: 24 of 826 loans in default

Compare Ratio by Quarter

Documents

Federal regulatory actions: OTS cease and desist order for unsafe banking practices, February 2009:Document

Company Response

Steven Bornhoft, senior vice president of marketing and communication for Peoples First Community Bank, says the bank has not sold Ginnie Mae securities in several years. Consequently, he says, Ginnie Mae was not notified of the OTS cease and desist order. "The volume of loans produced by Peoples First Community Bank has decreased in part due to regulatory problems, but the quality of the loans produced has not decreased," says Bornhoft. "We continue to produce loans of a very high quality for sale on the secondary market."
Nationstar Mortgage, LLC
45%
2.69%
$100M
Click for moreClick to close
Default Rate Notes: 62 of 2,309 loans in default

Compare Ratio by Quarter

Documents

State regulatory actions: Kentucky Office of Financial Institutions, January 2008, settlement agreement, fine of $105,000 for employing unlicensed brokers:Document

Company Response

Ron L. Fountain, associate general counsel at Nationstar, says the Kentucky settlement agreement was fully disclosed to Ginnie Mae. "It was on the application," he says.
Central National Bank
37%
2.21%
$106M
Click for moreClick to close
Default Rate Notes: 6 of 271 loans in default

Compare Ratio by Quarter

Documents

Federal regulatory actions: OCC written agreement, September 2009, for unsafe banking practices, Document

Company Response

Central National did not respond to requests for comment
Oriental Bank and Trust
35%
2.1%
$177M
Click for moreClick to close
Default Rate Notes: 16 of 761 loans in default

Compare Ratio by Quarter

Documents

Federal regulatory actions: FDIC Order to Pay Civil Money Penalty, March 2009, for inaccurate submission of HMDA data, Document

Company Response

Oriental Bank did not respond to requests for comment
Doral Bank
33%
1.99%
$577M
Click for moreClick to close
Default Rate Notes: 76 of 3,820 loans in default

Compare Ratio by Quarter

Documents

Federal regulatory actions: FDIC cease and desist order, February 2008, for Bank Secrecy Act violations, Document; lifted in Sept. 2008; FDIC consent agreement, July 2009, for flood insurance violation, Document; Settled SEC complaint in July 2006 alleging $921 million financial fraud, Document

Company Response

Lucienne Gigante, a Doral Bank spokesperson, said in an email statement, "Doral Bank's Cease and Desist for BSA Matters was remediated and terminated. Any enforcement action that may be imposed by our regulators is publicly disclosed in accordance to applicable regulations."
James B. Nutter & Co.
24%
1.43%
$515M
Click for moreClick to close
Default Rate Notes: 62 of 4,345 loans in default

Compare Ratio by Quarter

Documents

Other regulatory actions: FTC complaint and consent order for failure to secure mortgage data, June 2009 Document, Document

Company Response

In a statement, James B. Nutter & Co said the company had corrected the data security problem, related to a flaw in an industry-standard software, when the FTC published the consent order. The company said no fine was levied or deceptive practice alleged. The company said it has been "a qualified issuer of GNMA securities for over thirty years" and "remains proud of its responsible lending practices."
Guaranty Bank FSB
12%
0.71%
$93M
Click for moreClick to close
Default Rate Notes: 1 of 141 loans in default

Compare Ratio by Quarter

Documents

Federal regulatory actions: OTS cease and desist order for unsafe banking practices, March 2009, Document

Company Response

In a statement, Guaranty Bank said that all components of the OTS cease and desist order have been satisfied as of June 30 except for reaching an 8% Tier I Core Capital ratio and a 12% Total Risk Based Capital ratio. The company said the loans originated by its retail mortgage division are "of a high quality and carry a low risk profile."
Westernbank Puerto Rico
7%
0.45%
5
Click for moreClick to close
Default Rate Notes: 1 of 221 loans in default

Compare Ratio by Quarter

Documents

Federal regulatory actions: FDIC cease and desist order for unsafe banking practices, May 2009, Document

Company Response

Westernbank did not respond to requests for comment
Mortgage Investors Corporation
0%
0%
$521M
Click for moreClick to close
Compare Rate Notes: 0% in 2009
Default Rate Notes: zero of 11 loans originated in 2009; 9.21%, 5 of 53 loans originated in 2008; 10.18%, 1,082 of 9,410 loans originated in 2007

Compare Ratio by Quarter

Documents

HUD regulatory actions: HUD Mortgage Review, Aug. 2008, indemnified loans worth $45,363, and administrative penalty of $78,500, Document

Company Response

Mortgage Investors Corp. did not respond to a request for comment
Eurobancshares, Inc
0%
0%
$0
Click for moreClick to close
Default Rate Notes: zero of 20 loans

Compare Ratio by Quarter

Documents

Federal regulatory actions: FDIC cease and desist order, October 2009, for unsafe banking practices, Document; Federal Reserve written agreement, September 2009, Document

Company Response

Eurobancshares did not respond to requests for comment
Marathon Financial Corp.^
0%
0%
$0
Click for moreClick to close
Default Rate Notes: zero of 4 loans

Compare Ratio by Quarter

Documents

Federal regulatory actions: Dept. of Justice complaint, July 2008, alleging fraud against Ginnie Mae, case: United States v. Aubrey Terbrack, Denise Money

Company Response

An internal audit by Ginnie Mae found that Marathon Financial executives defrauded the agency of $21 million between 1998 and 2007. Former president Aubrey Terbrack and vice president Denise Money pleaded guilty to wire fraud in September 2008, and were sentenced in March. The executives could not be reached for comment.

* Source: Ginnie Mae, "List of Ginnie Mae Approved Single Family Issuers As Of 11/24/00."

** Source: HUD's Neighborhood Watch. Compare ratio based on FHA default rate for retail loans originated in the last two years. Compare ratio numbers shown in the "Compare Ratio" column in the table above are from Oct. 31, 2009. The last compare ratio shown in the line graphs for the issuers are from Sept., 30, 2009, which was the end of the third quarter.

*** Source: HUD's Neighborhood Watch; FHA loan defaults within first two years; default rate as of Oct. 31, 2009; loans originated by institution (retail); national average: 6.01%.

**** Source: Inside Mortgage Finance. Data from 2008 to September 2009.

^Ideal Mortgage Bankers dba Lend America was defaulted by Ginnie Mae on Nov. 30, 2009; Marathon Financial was defaulted by Ginnie Mae in 2008; Taylor Bean & Whitaker was defaulted by Ginnie Mae in August 2009.

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