Federal housing officials served subpoenas Tuesday on Sterling National Mortgage Co. in Great Neck and 14 other federally licensed lenders nationwide as government payouts rise on delinquent, federally insured loans.
On mortgages made since December 2007, Sterling has 16 claims paid out on delinquent loans by the Federal Housing Administration, which licenses lenders to make FHA-insured loans, and also 364 default cases, according to FHA data. That's a combined claims and default rate of 12.9 percent, higher than the 5 percent average nationwide, data show, which, federal officials said, could be an indication of poor underwriting standards.
Auditors and investigators descended on the lenders' corporate offices in the morning to seize documents and other data related to the failed loans. Federal housing officials targeted lenders with higher-than-average default rates, more payout claims than most, and loans that failed early in the life of the mortgage - what officials call an "early warning" of another potential wave of foreclosures.
Sterling's spokesman was not available Tuesday, and the lender declined to provide other officials for comment.
The lender, which has four offices on Long Island, is a subsidiary of New York-based Sterling National Bank, which issued a statement saying, "We reserve comment until we've had time to fully evaluate the announcement."
Federal officials declined to comment on specifics.
The subpoenas are a joint operation between the FHA and the Office of Inspector General for the U.S. Department of Housing and Urban Development.
"A key component of this is to reduce risks and crack down on bad practices," FHA Commissioner David Stevens said at a news conference with Inspector General Kenneth Donohue.
With credit tight, FHA has filled in much of the gap by insuring loans, but that has increased its risks. In September, its cash reserve was $3.6 billion, way down from the $12.9 billion for the same time a year ago. That represented .53 percent of all the single-family home loans insured by the FHA, below the 2 percent set by law.