In a recent article ("At FHA, Odd Accounting Burnishes Stevens' Image"), American Banker challenged the enforcement record of the Federal Housing Administration under the leadership of former Commissioner David Stevens. Enforcement is a joint responsibility of the FHA commissioner and the general counsel. The representation that FHA was, or is, lax on lenders is false.

Since the beginning of the Obama administration, which includes David Stevens' tenure at FHA, there has been a culture shift directed at reducing risk to FHA. Because of a number of policy changes, increased lender oversight and the superb work of our career attorneys in the enforcement division of the Office of General Counsel, FHA is a more secure insurance program.

During this period, FHA has taken important steps to reduce its risk. FHA appointed its first chief risk officer, established higher credit qualifications for higher risk borrowers, increased net worth requirements, and made lenders responsible for the lending practices of third party loan correspondents.

At the same time, HUD's Mortgagee Review Board has sanctioned a significant number of lenders for material violations of FHA's origination and servicing requirements, in addition to its withdrawal of more than 1,500 lenders who failed to meet FHA's recertification standards. All of these cases are serious and all are enforcement actions. This is not "odd accounting;" this is a fact.

Moreover, any sound assessment of the Mortgagee Review Board's efficacy must be qualitative, and not merely quantitative. During David Stevens' tenure at FHA, FHA investigated and took aggressive action against its third largest mortgage originator, Taylor, Bean & Whitaker Mortgage Corporation. HUD, through FHA and the Government National Mortgage Association, coordinated with the Department of Justice and took action at the first available opportunity to protect HUD's interests by preventing TBW from originating, underwriting, servicing or securitizing FHA-insured loans. HUD also brought enforcement actions against two of TBW's principals.

HUD took decisive action in withdrawing FHA's approval of Ideal Mortgage Bankers, doing business as Lend America and Lending Key, to originate, underwrite and service FHA-insured mortgages and participate in FHA's single family insurance program, in a coordinated action involving the Justice Department and HUD's Office of Inspector General. HUD also brought enforcement actions against individuals involved in Ideal's misconduct.

FHA's enforcement actions are not limited to actions by its Mortgagee Review Board. In the past three years, HUD has dramatically increased its referrals for civil fraud prosecution. For example, the Department of Justice, on behalf of HUD, has brought suit against Capmark Finance, Inc. and Deutsche Bank, and is working with us to resolve numerous other matters.

HUD also pursues enforcement cases through administrative proceedings. We recently resolved two significant enforcement cases, against Prospect Mortgage, LLC and Fidelity National Financial, Inc., through multimillion dollar settlements. Enforcement matters take time to investigate and are not made public until HUD takes action. We continue to be very busy.

Helen R. Kanovsky
General Counsel
Department of Housing and Urban Development