Federal prosecutors sued Ideal Mortgage Bankers Ltd., which does business as Lend America, accusing the fast-growing lender of falsely certifying that more than $14 million in loans met Federal Housing Administration requirements.
Benton J. Campbell, the U.S. Attorney for the Eastern District of New York in Brooklyn, asked Judge Joseph F. Bianco of the U.S. district court there to issue an injunction preventing Lend America from writing FHA loans.
"Fraudulent lending practices that compromise the integrity of the FHA mortgage insurance program and contribute to an alarming increase in loan defaults and housing foreclosures will not be tolerated," Campbell said in a press release issued Tuesday.
A Lend America spokesman said: "The company was taken by surprise, expects to continue in business and will respond more completely once all allegations are reviewed."
The company ranks 18th nationwide in issuance of Government National Mortgage Association securities. It services about $850 million of loans for Ginnie Mae, the agency that securitizes FHA loans.
Lend America, which makes most of its loans through call centers, recently expanded into correspondent and wholesale lending.