U.S. takes action against Lend America

The federal government on Monday sought to shut down the government-backed operations of Lend America, a large mortgage lender based on Long Island. The move prohibits the company from making new mortgages insured by the Federal Housing Administration or issuing mortgage-backed securities insured by Ginnie Mae.

FHA imposed $512,000 in penalties on the company for allegedly violating FHA requirements, including failing to document borrowers' income and creditworthiness, and for submitting false certifications.

Lend America, owned by Ideal Mortgage Bankers, has 30 days to challenge the action. The company has previously fought an FHA suspension and is fighting Justice Department fraud charges in civil court.

"The Company is surprised and disappointed by today's action by the U.S. Department of Housing and Urban Development's Mortgagee Review Board," Lend America said in a statement. "The Company is currently reviewing all possible options and remedies in response to this action, and will respond shortly once a decision has been reached."

-- Zachary A. Goldfarb