b'records. Notably, the Sixth Circuit explained thatagreed to pay $15million in civil money penalties. even though the borrower may have made fraudulentThe DOJ acknowledged that the settlement amount misrepresentations in obtaining the credit, that didreflected the significant measures that Guaranteed not preclude a cause of action under TILA. ThoughRate had taken, both before and after it knew of the the Ability to Repay requirement has engenderedinvestigation, to rectify the alleged noncompliance with less litigation than the industry anticipated, the Sixthprogramguidelines. Circuits decision could inspire more plaintiffs to bringIn October, the DOJ also settled claims with claims under this provision, at least in the Sixth Circuit.Guild Mortgage, resolving an extensively litigated CFPB Issues Final Rules Revising General Qualified2016 lawsuit filed in California federal court by a Mortgage Requirements and Creating Newwhistleblower, in which the DOJ later intervened. In the Seasoned Qualified Mortgage lawsuit, the DOJ alleged that Guild Mortgage violated In December, the CFPB announced two final rulesthe FCA by knowingly violating material underwriting relating to qualified mortgage (QM) loans as part of itsguidelines in its origination of FHA-insured mortgage effort to increase access to affordable mortgage credit,loans, as well as by maintaining a non-compliant the General QM Final Rule and the Seasoned QMquality control program and failing to self-report known Final Rule. QM loans are loans which presumptivelyunderwriting violations. Guild Mortgage agreed to pay satisfy ability-to-repay requirements. The new rules$24.9 million to resolve these claims. The settlement will increase the number of loans that meet the legalwith Guild Mortgage resolves all of the DOJs publicly standard for a QM loan. The General QM Final Ruleannounced FCA actions concerning alleged violations replaces the prior QM standard, which was based onof FHA program guidelines. a consumers debt-to-income ratio, with a standardDOJ Files FCA Lawsuit Against One HECM Lender, based on the price of the loan. The rule provides thatResolves Anothera loan is presumptively affordable so long as the loansIn September, the DOJ filed a complaint against Nutter APR does not exceed the average prime offer rateHome Loans, alleging that the company had forged for a comparable loan by more than 1.5 points. Theunderwriters signatures on FHA mortgage insurance Seasoned QM Final Rule creates a new category ofcertificates and used unqualified underwriters when Seasoned QMs for first-lien, fixed-rate transactionsoriginating HECMs, insured by the FHA, resulting that season by meeting certain performance criteria,in loans that should not have been approved. The including limitations on the number of delinquenciescomplaint alleged that these practices violate the FCA within the seasoning period. The purpose of theand FIRREA. In announcing the lawsuit, the DOJ said Seasoned QM Final Rule is to promote responsiblethat the complaint sends a clear message we will not innovation in the mortgage market and to providetolerate fraud against programs designed to financially lenders flexibility in responding to economic changes.help our nations seniors. The emphasis on protecting DOJ Settles Two More FCA Cases Concerning Allegedseniors aligns with the DOJs recent enforcement Breaches of FHA Loan Program Guidelines patterns and indicate a continued focus on actions Since 2012, the DOJ and HUD have brought overdesigned to protect vulnerable populations. 30FCA actions against lenders alleging that they falselyThe lawsuit filed against Nutter Home Loans came on certified compliance with FHA and VA guidelines forthe heels of a March settlement between the DOJ and FHA- and VA-insured mortgage loans. As we discussedFinance of America Reverse, which resolved allegations last year, in October 2019, HUD and the DOJ enteredthat the reverse mortgage lenders predecessor entity into a MOU agreeing that HUDs administrativeviolated material underwriting guidelines in its pre-May enforcement mechanism will be the primary tool used to2010 origination of FHA-insured HECMs. Until May enforce HUDs lender guidelines rather than DOJ FCA2010, the lenders appraisal order forms included the actions. We predicted that the industry would see aloan amount, which the DOJ alleged was an improper continued winddown in existing FCA actions as a result.attempt to influence the propertys appraised value. That prediction proved true as the DOJ resolvedFinance of America Reverse agreed to pay $1.97 million two such existing actions in 2020, and filed no newto resolve the FCA allegations, and $500,000 to publicly announced actions. In April, the DOJ andresolve HUDs administrative claims. Guaranteed Rate, Inc. reached a settlement agreementNew York Attorney General Reaches $17 Million resolving disputed allegations that GuaranteedSettlement with Caliber Home Loans over Loss Rate had violated the FCA and Financial InstitutionsMitigation PracticesReform, Recovery and Enforcement Act of 1989In June, the New York Attorney General secured an (FIRREA) by falsely certifying compliance with FHAapproximately $17 million settlement with Caliber Home and VA program guidelines for loans beginning inLoans, which services loans owned or guaranteed 2008. Toresolve the DOJs claims, Guaranteed Rate 17'