Collingwood Group Chairman Brian Montgomery with GWN Consulting founder and President Karen Garner at the financial advisory firm’s District office. (Jeffrey MacMillan/Capital Business)

The Collingwood Group, a District-based financial advisory firm, has acquired GWN Consulting, a Herndon firm specializing in Federal Housing Administration and Ginnie Mae risk management and quality control.

The acquisition comes as heightened regulatory scrutiny of mortgage lenders has resulted in a rise in enforcement actions, compliance litigation and claims disputes. Lenders looking to avoid tangling with regulators are turning to consultants for a preemptive review of their operations, which made GWN an attractive asset, according to Brian Montgomery, vice chairman and managing director of Collingwood.

Montgomery, who would not disclose the financial terms of the agreement, said he was impressed with the breadth of experience at GWN, having partnered with the company on a number of projects. All five members of GWN’s management team have held senior positions tied to FHA lending at the Department of Housing and Urban Development.

Collingwood will retain all of GWN’s consultants for a combined staff of 25 employees. GWN founder and president Karen Garner will continue to manage the business, which will operate as part of Collingwood’s Risk Management & Compliance Division.

“Karen and her colleague’s expertise was a good match for us,” said Montgomery, a former FHA commissioner himself, who co-founded Collingwood with Joe Murin, former president and chief executive for Ginnie Mae.

Garner said joining Collingwood will provide her team with resources and products that complement GWN’s existing platform. “If a lender called me, I would say I could do A,B and C. But now if someone calls, I can do three-fourths of the alphabet, or at least half,” she said.

While Garner has seen an increase in business from lenders facing audits or enforcements, there has been more demand from those hoping to prevent any actions.

Montgomery said a few high-profile cases last year raised alarms in the lending community, namely the Justice Department lawsuit against Deutsche Bank in May. The DOJ accused the bank under the False Claims Act of misleading the FHA into believing mortgages issued by its subsidiary qualified for federal insurance.

Violations can carry hefty civil penalties of up to $11,000 per false claim and permits the court to triple the amount of the damages.

The number of enforcement actions for noncompliance with FHA requirements plummeted last year from the soaring heights of 2010. FHA’s Mortgagee Review Board took action against nearly 300 lenders in 2011, a far cry from the 1,500 sanctions a year earlier, but a significant enough number to keep lenders on their toes.

FHA-insured loans skyrocketed following the collapse of the subprime market. Whereas FHA’s share of the mortgage market was around 3 percent in 2007, it surged to upwards of 25 percent in early 2009. Montgomery suspects the sheer volume of loans, coupled with new entrants into the market, contributed to more enforcement actions.