The Department of Housing and Urban Development today will announce a probe of 15 Federal Housing Administration lenders whose loans have produced high default rates.
Other details were not available at press time.
The agency has stepped up enforcement actions against FHA lenders, including two that collapsed last year, Taylor, Bean & Whitaker Mortgage Corp. and Ideal Mortgage Bankers Ltd., better known as Lend America.
Since the subprime market imploded in 2007, the FHA, once a mortgage industry backwater, has seen its volume explode. FHA loans are the only product lenders can offer most borrowers who have little money for a down payment. But HUD now says the FHA attracted companies with questionable practices during the growth spurt.
Last month, in testimony before the House Financial Services Committee, HUD Secretary Shawn Donovan asked lawmakers to authorize the FHA "to hold lenders accountable nationally for their performance."
Right now, HUD can easily shut down an individual branch that produces loans with outsized defaults, but it must go through a bureaucratic process to revoke a lender's national FHA license.
