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HUD - History Making KB Home Fine
Saturday, 09 July 2005
HUD ANNOUNCES $3.2 MILLION SETTLEMENT AGAINST KB HOME MORTGAGE COMPANY
Largest settlement in history of Mortgagee Review Board (HUD Press Release)
Washington-- The Department of Housing and Urban Development today announced it has reached a $3.2 million settlement with KB Home Mortgage Company in connection with a series of alleged violations of HUD requirements. The $3.2 million is the largest amount ever collected in the 30-year history of HUD's Mortgagee Review Board (MRB), which takes administrative actions against FHA-approved lenders...  "This 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."...
Associated Press: KB Home also agreed to beef up its quality assurance practices as part of the deal, HUD officials said. See: Associated Press Brief and HUD Press Release

KB Home, HUD settle over loans
By Associated Press
 
 
HUD No. 05-093
Lemar Wooley
(202) 708-0685
www.hud.gov/news/
                  
              
HUD ANNOUNCES $3.2 MILLION SETTLEMENT AGINST
                               KB HOME MORTGAGE COMPANY
                           Largest settlement in history of Mortgagee Review Board

7/6/2005
WASHINGTON -- The Department of Housing and Urban Development today announced it has reached a $3.2 million settlement with KB Home Mortgage Company in connection with a series of alleged violations of HUD requirements. The $3.2 million is the largest amount ever collected in the 30-year history of HUD's Mortgagee Review Board (MRB), which takes administrative actions against FHA-approved lenders.

"I am proud to announce this landmark settlement," said Brian D. Montgomery, Assistant Secretary for Housing-Federal Housing Commissioner, who chairs the Mortgagee Review Board. "This 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."

The 13 alleged violations by KB Mortgage Company involve a number of poor underwriting practices such as approving loans to borrowers who were not eligible; approving loans based on overstated or incorrect income; failing to include all of borrowers' debts; failing to properly verify sources of funds; and, failing to ensure gift letters met HUD requirements.

Following a review of KB Home Mortgage's FHA activities by HUD's Quality Assurance Division, the MRB decided to take action. The other HUD officials who comprise 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 Department's Assistant Secretary for Fair Housing and Equal Opportunity also participates. All MRB administrative actions are published in the Federal Register.

HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development as well as enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov."
Source: http://www.hud.gov
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KB Home has agreed to pay $3.2 million as part of a settlement with federal regulators who found that the home builder's mortgage financing arm approved home loans for borrowers who were not qualified.

KB Home Mortgage Co., an approved lender of federally insured mortgage loans, did not admit any wrongdoing as part of its agreement with the Department of Housing and Urban Development's Mortgage Review Board.

Regulators alleged the company violated 13 HUD lending requirements, including approving loans for borrowers who were not eligible because they had overstated or misreported their income, and failing to verify borrowers' income or account for all their debt.

KB Home also agreed to beef up its quality assurance practices as part of the deal, HUD officials said.

"We are pleased to have reached a resolution on the procedural issues with HUD, all of which have been addressed internally by the mortgage company," KB Home spokesman Daniel Weidman said in a statement.

The settlement, which was announced Wednesday, comes days after KB Home said it has agreed to sell its mortgage financing business to a subsidiary of Countrywide Financial Corp.

Under that agreement, Calabasas-based Countrywide will acquire all of the assets of KB Home Mortgage Co. and manage the business as part of a joint venture with KB Home.

KB Home, one of the nation's largest home builders, operates in several states, including California, Florida, Nevada, Texas and Georgia. A subsidiary of the company also builds homes in Frace.     
            ******************************************************************

HUD News Release

 
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