Mortgage guarantor Ginnie Mae and the Federal Housing Administration have bumped a Long Island-based lender from a government-insured mortgage program that had allowed it to grant FHA-backed mortgages, while simultaneously denying the company the right to sell mortgage-backed securities. The lender, TopDot Mortgage, reportedly violated federal lending rules on numerous occasions, according to the Center for Public Interity, and had accrued a portfolio of $181.2 million in Ginnie Mae securities before the federal agency took action. Ginnie Mae had allowed TopDot to sell FHA loans in the secondary mortgage market, despite the fact that the lender has been the target of several lawsuits accusing it of misleading borrowers about the terms of its FHA loans. Additionally, TopDot’s FHA loan default rate was found to be more than double that of comparable lenders in the area, hitting about 14.3 percent in the last two years. “This lender demonstrated a pattern of utter disregard for how we do business,” David Stevens, FHA commissioner, said.

Mortgages remain elusive for house hunters in New York and as a result,
many buyers are working with more than one lender. Developers are also
lining up additional lenders to help buyers obtain financing. The developments come in response to the tough credit environment.
Banks have tightened the availability of home loans to buyers and at
the same time, many are reluctant to write mortgages for some new
buildings where only a small percentage of apartments have been sold. As attorneys for buyers are putting mortgage contingency clauses in
contracts, attorneys for sellers are directing buyers to apply for
financing at more than one bank or go to a mortgage broker, said Daniel
Berman, an executive vice president with Bellmarc Realty, who has seen
the scenario play out in a few recent deals.
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