Ideal Mortgage Bankers Ltd., which uses the brand name Lend America, has stopped writing mortgages after losing its license to do business with the Federal Housing Administration.
"Effective immediately the company has ceased … loan origination and operations," the Melville, N.Y., lender said on its Web site Tuesday.
The company was in the process Tuesday of laying off a large portion of its 600-person work force, 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 discuss layoffs or bankruptcy options.
The government Monday ordered Lend America to halt origination of FHA-backed loans, citing numerous violations, including the payment of "excessive" fees to mortgage brokers. As part of the same set of sanctions, the Government National Mortgage Association declared Lend America in default as a servicer. This summer, Lend America was actively trying to sell its $1 billion servicing portfolio.
The company has about 30 days to challenge the FHA's sanctions. FHA lending accounted for almost all of its originations. Lend America said it was "surprised and disappointed" by the agency's actions.
Michael Ashley, a Lend America executive, pleaded guilty in 1993 to three counts of conspiracy to commit wire fraud.