The Federal Housing Administration has suspended a Baltimore lending company from originating and underwriting new FHA-insured mortgages because of fee overcharges, the federal agency announced Monday.

The enforcement action comes after the FHA said Equitable Trust Mortgage Corp. of Baltimore improperly overcharged 37 borrowers for broker and loan origination fees in excess of the 1 percent of the mortgage amount allowed by the U.S. Department of Housing and Urban Development. Moreover, HUD said it discovered that the larger fees were charged to 68 percent of minority borrowers.

By charging borrowers both a broker fee and an additional 1 percent origination fee, "ETM received excessive compensation and improperly charged consumers duplicative and unreasonable fees to originate their loans," the FHA said.

"It is critical that FHA lenders apply our standards and do not overcharge borrowers," FHA Commissioner David Stevens said in a statement. "The fact that a disproportionate number of these borrowers were minority families is also troubling."

In addition, HUD's Mortgagee Review Board found that ETM failed to properly disclose all loan origination fees, including lender fees to mortgage brokers, on borrower's "Good Faith Estimate" statements in 21 cases.

As part of its review, HUD also found that ETM's loans have a higher default rate than the national average. HUD's Office of Inspector General is also investigating the firm's lending practices.

ETM has been immediately suspended for six months. The firm can appeal its suspension.

A message left for ETM executives was not returned Monday.

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