The demise of Ideal Mortgage Bankers Ltd., which used the brand name Lend America, is a potential boon to other home lenders that operate in the Long Island market.

With a company that wrote $2 billion to $3 billion of Federal Housing Administration loans a year out of business, displaced Lend America applicants need a place to land.

"We're seeing some of their customers," said Michael McHugh, the chief executive of Continental Home Loans, which, like Lend America, is in Melville, N.Y.

"They're calling us up in a panic. Their funding source has gone away. They don't know what to do."

Kenneth Doepp, an account executive at Franklin First Financial in nearby Hauppauge, said he also has seen more business thanks to Lend America's demise.

"We're working with customers and Realtors on some of their deals," he said.

In the two weeks since Lend America collapsed, the company has garnered more media attention than it did during the 20 years or so it was in business.

Much of the coverage has focused on the sensational details of the story.

Six hundred workers lost their jobs right before Christmas; Michael Ashley, an executive vice president and the public face of Lend America, has a criminal record (he pleaded guilty to three counts of conspiracy to commit wire fraud in 1993); Lend America called in former New York Mayor Rudolph Giuliani to put out the fire (he failed to do so); and 100% of the loans Lend America was funding are backed by the U.S. taxpayer via the booming FHA program.

The government has accused Lend America of fraud — specifically, of falsely certifying that more than $14 million of loans the company made met FHA guidelines.

Lend America also has an outsized default rate — 11.5% of all the FHA loans it originated from November 2007 through October of this year, more than double the figure for all FHA lenders.

Less attention, however, has been paid to the impact of Lend America's failure on its home market.

Several national lenders such as Wells Fargo & Co. and Bank of America Corp. operate on Long Island, but when it comes to market share, Continental ranks first, according to the Department of Housing and Urban Development (which oversees the FHA program).

A veteran mortgage banker, McHugh has been in the business for over two decades, seeing boom-and-bust cycles before.

A nonbank, Continental originates upward of $1.5 billion a year through seven retail branches for the FHA and for the government-sponsored enterprises.

Even though his company, for now, is benefiting from Lend America being shut down, McHugh said he does have one concern: available warehouse credit.

"We have warehouse lines," McHugh said, but he worries about providers like National City Corp., which is now owned by PNC Financial Services Inc.

PNC aims to shut down the warehouse unit by the middle of next year, several industry sources said last week. Paul Best, the industry veteran who runs the unit, referred questions to PNC public relations officials in Pittsburgh.

A spokesman for PNC would say only that the banking company is continuing to wind down Nat City's warehouse business.

"I don't get it," McHugh said. "It's a good business for them and they're closing it."

Another opportunity created by Lend America's collapse: some of its former workers are shopping themselves to competitors as a team, several sources said.

What's in it for the competitor? Gaining a wealth of experienced people who know the FHA business inside and out.

McHugh said he is considering hiring some of Lend America's former employees, including those with secondary market, sales and processing experience.

A close review of the charges filed against Lend America shows that its problems were concentrated in its 2006 and 2007 book of business. Ashley has said Lend America's downfall was caused by a handful of bad apples who were fired long ago.

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