On April 8, 2016, the Department of Justice (DOJ) officially announced a $1.2 billion settlement with a national bank and one of its executives relating to the bank’s participation in the Federal Housing Administration (FHA) Direct Endorsement Lender Program. As part of the settlement agreement, the bank acknowledged that between the period of May 2001 through December 2008, it submitted loans with certifications to HUD that were not in fact eligible for FHA insurance. The bank also admitted that it did not self-report or maintain a quality assurance program that complied with HUD’s interpretation of the FHA guidelines. The bank’s executive, the Vice President of Quality Assurance, further admitted that he oversaw the creation of the bank’s new self-reporting policy and that during his time as the Vice President, the bank failed to report to HUD loans that were identified as having material findings.
The national bank had previously announced that a tentative settlement had been reached in February of this year. The settlement agreement resolves the claims pending against the bank and its executive in the United States District Court for the Southern District of New York.