Alethes LLC, a Lakeway-based mortgage banker and brokerage, is among 15 mortgage companies facing scrutiny in a U.S. Department of Housing and Urban Development probe.

On Jan. 12, HUD’s Office of Inspector General served subpoenas Alethes’ corporate office requesting documents and data on failed home loans that resulted in claims paid out by the Federal Housing Authority mortgage insurance fund.
Alethes CEO Danny Smith said HUD appeared to be randomly targeting loans from the North Texas area from late 2005 through the first quarter of 2008.
Smith noted that 17 of the firm’s 20 loans that received down payment assistance from nonprofit organizations during this time were issued following FHA guidelines.
“This down payment-assistance type program was discontinued by FHA in August 2008 due to the high amount of defaults. Alethes’ default on these loans has been significantly higher than other originations,” Smith wrote in an e-mail Friday.
Smith said Alethes is complying with the subpoena and cooperating with HUD and inspector general’s office.
“Alethes is reviewing each of these files to determine if there are any other commonalities,” he wrote, adding that since 2005, the firm has issued more than 8,000 FHA mortgage loans.
According to Alethes’ web site, the company originated as AmeriNET Mortgage in 1998. It operates and funds loans as both a mortgage banker and a mortgage broker. Alethes is Greek for truth and possibility.
The probe is part of a HUD initiative focusing on mortgage companies with significant claim rates against the FHA mortgage insurance program.
Subpoenas were served to 15 mortgage companies across the country, including two other Texas firms — Alacrity Financial Services in Southlake and Americare Investment Group Inc. in Arlington.
The probe is analyzing loan data that focused on companies with a large number of claims and certain loan underwriting volume. Investigators also are examining firms with a large number of defaults and claims compared with the national average and claims from earlier in the life of the mortgage.
“The goal of this initiative is to determine why there is such a high rate of defaults and claims with these companies and whether there is wrongdoing involved,” Inspector General Kenneth Donohue said in a HUD release. “We aren’t making any accusations at this time, we have no evidence of wrongdoing, but we will aggressively pursue indicators of fraud.”
This initiative was prompted, in part, by the FHA Commissioner David Stevens who, according to the release, was alarmed by the incidence of claims against the FHA insurance fund by a number of poor performing companies and reached out to the HUD OIG for assistance.
“We are taking risk management extremely seriously. In addition to the policy changes we are implementing and additional changes we plan to announce later this month, we need to hold FHA lenders accountable for the high rates of defaults and claims against FHA,” Stevens said. “The Inspector General’s initiative will help us determine whether there is fraud and better manage risk in the long run.”
The other companies served subpoenas were First Tennessee Bank N.A., Memphis, Tenn.; Security Atlantic Mortgage Co., Edison, N.J.; Pine State Mortgage Corp., Atlanta, Ga.; Birmingham Bancorp Mortgage Corp., West Bloomfield, Mich.; Assurity Financial Services, LLC, Englewood, Colo.; D and R Mortgage Corporation, Farmington, Mich.; Webster Bank, Cheshire, Conn.; Mac-Clair Mortgage Corp., Flint, Mich.; 1st Advantage Mortgage, Lombard, Ill.; American Sterling Bank, Independence, Mo.; Sterling National Mortgage Co. Inc., Great Neck, N.Y.; and Dell Franklin Financial LLC, Columbia, Md.