NEW YORK - The sudden fall of Lend America, a nationwide vendor of government-backed home loans, is leaving many borrowers with deep regrets.

In all corners of the U.S., customers say Lend America, a heavy user of television infomercials, did not fulfill all obligations when refinancing loans into government-backed mortgages, including paying off existing liens.

As of Dec. 1, the company closed its doors after the Federal Housing Administration withdrew its approval for Lend America to make government-guaranteed loans.

It is a tale of caution as record numbers of borrowers flock to FHA loans, which for many Americans is the only course of action given its easier credit and downpayment requirements.

Brenda and Michael Lafoon of Chester, Virginia, thought they were freed of their two mortgages as they signed closing papers with Lend America on Nov. 13. Now a month later, HSBC and CitiMortgage are still asking for their mortgage payments, unaware that their loans had been refinanced.

In Lawrenceville, Georgia, Jeffrey Williams paid thousands of dollars in various fees over five months as he sought a Lend America loan for a house purchase. Living in a hotel because he expected to be in a house by now, Williams is now wondering if all was spent for naught.

Common to many Lend America borrowers were responses to televised ads heralding federal programs offered by the company and Michael Ashley, its chief business strategist, who the FHA said has made a career of violating mortgage regulations.

After announcing a bombshell multimillion dollar commitment for homeowners to refinance with the Federal Housing Administration loan program, another announcer reminds viewers of Lend America's multimillion dollar offer.

The infomercial thing really got me, said Williams, who works in software support. It was almost like they were portraying themselves as the federal government.

Lend America is instead under fire from the federal government for alleged abuses, including submitting false documents and making loans that did not meet requirements. It is part of a broader review started by the FHA as it grapples with its soaring loan volumes and rising defaults.

On Nov. 30, the FHA withdrew Lend America's rights to make loans under the government program. This proved fatal to the Melville, New York-based company, which closed a day later.

The company, whose business was about 90 percent FHA lending, said it expected to nearly double its volume of loans to $2.5 billion in 2009 from 2008.

Customers in Florida, Ohio, Kentucky, Louisiana, Minnesota and California who refinanced with Lend America in October or November told Reuters their original loans were not paid down after a refinance. They now have two banks expecting payments.

Tonya Audrick of Kenner, Louisiana, got a default notice from Bank of America after refinancing the loan with Lend America two months ago. The original loan wasn't paid off as of Friday, so she will start paying Bank of America again.

Whatever their problem is, they need to get it together, she said. They don't care if you lose your home.

A Lend America spokesman said on Friday that, Many issues, like this issue, are currently being correctly resolved as the company winds down its operations.

There were hints of resolution on Monday.

Tonya Audrick had received an escrow refund check and a Saturday evening voice message asking for a callback to Lend America. The Lafoons were told they would be placed on a list to correct errors in their loan, but were also asked to make another payment to Lend America.

The FHA's enforcement came six weeks after U.S. Attorney for the Eastern District of New York Benton Campbell sought an injunction against Lend America and Ashley, alleging the company falsely certified more than $14 million in loans. Ashley, interviewed by Newsday on Friday, called the FHA action disgusting injustice, and blamed several bad actors.

Lend America's Ashley did not respond to requests for an interview.

Advertising that drew in the Lafoons and others is eerily similar to those created by subprime lenders that doled out credit during the housing boom, said Vanessa Perry, a marketing professor at George Washington University School of Business, who has studied mortgage ads for two years.

Making explicit reference to the government added to the credibility of the company, she said.

It's clearly targeted to people who are having problems, then it offers a lifeline, she said. It's very compelling. (Editing by Carole Vaporean)