Mortgage Law
Mass Layoff at LI Home Lender Amid Federal Probe
December 3, 2009 by admin · Leave a Comment
Melville-based Lend America closed its loan-making operation Tuesday and laid off most of its 600 workers, a day after federal officials revoked its license to make loans insured by the Federal Housing Administration.
FHA-backed loans made up at least 90 percent of the company’s business. After the subprime loan collapse two years ago, the FHA became the primary insurer for nonprime mortgages; if an FHA-backed loan defaults, the government takes the hit.
The top generator of FHA loans in the metro region, Lend America was about to ramp up business, taking loans from brokers and also pooling FHA loans from lenders to sell to investors – with a goal of selling $500 million in mortgages each month by the middle of next year.
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