Consumer Finance Insights
April 30, 2020

DOJ Announces $15 Million Settlement with Mortgage Originator Over Alleged FCA Violations

On April 29, the Department of Justice (DOJ) announced that it settled allegations that an Illinois-based mortgage lender violated the False Claims Act (FCA), the Financial Institutions Reform, Recovery and Enforcement Act (FIRREA), and Program Fraud Civil Remedies Act (PFCRA) ​by falsely certifying that it complied with Federal Housing Administration (FHA) mortgage insurance requirements for certain loans originated as far back as 2008 for $15.06 million.

The complaint, which was filed by a whistleblower and is pending in the District Court for the Norther​n District of New York, concerns loans that the lender originated for the U.S. Department of Housing and Urban Development’s (HUD) FHA insurance program and the Department of Veterans Affairs (VA) loan program.  As part of the settlement, the mortgage lender admitted that it knowingly failed to comply with material program rules, including failure to maintain adequate quality control and failure to self-report underwriting deficiencies.

The settlement was the result of a whistleblower lawsuit and joint investigation conducted by HUD, HUD’s and VA’s Offices of Inspector General, DOJ, and the U.S. Attorney’s Office for the Northern District of New York.  The announcement acknowledges that the lender took significant measures to stop the alleged practices, both before and after being notified of the United States’ investigation.​  The whistleblower will receive $2.443 million from the settlement.