Topdot Mortgage, a Jericho-based lender, has been stripped of its license to make loans and sell mortgage-backed securities insured by the Federal Housing Administration.
Federal officials Monday accused Topdot, also known as Premium Capital Funding, of "numerous and egregious" violations of FHA requirements, including failure to document borrowers' income and evaluate their creditworthiness. Topdot has 30 days to file an appeal.
The lender has a 12.5 percent default and claims rate on loans made in the past two years, compared to a 5 percent average nationwide, FHA data shows. Out of Topdot's 7,349 loans for that period, 882 are in default, and the federal government paid Topdot on 37 loans, according to FHA.
"This lender demonstrated a pattern of utter disregard for how we do business, and its behavior not only put the FHA insurance fund at risk, but placed their own customers at greater risk of foreclosure," FHA Commissioner David Stevens said Monday in a statement.
Topdot said in a statement that it was "shocked" and "fervently disagrees" with FHA's assessment. Topdot said it accepts responsibility for "underwriting oversights" found in an FHA audit but said it has beefed up quality control. "Topdot has made significant improvements in the last 15 months that were resulting in declining default rates, and the FHA action does not recognize that important progress," the firm said.
Topdot's $181-million loan portfolio will be transferred to Virginia-based LoanCare Servicing Center, the same company that's now handling the portfolio of Lend America, the Melville-based lender whose licenses were also revoked late last year. Federal officials are also seeking a $674,000 fine against Topdot.