Blog Enforcement Watch September 08, 2015

Reverse Mortgage Servicer to Pay Over $29 Million to Resolve False Claims Act Allegations

On September 4, 2015, the Department of Justice (“DOJ”) announced that a company engaged in reverse mortgage servicing agreed to pay $29.63 million​ to settle allegations that it violated the False Claims Act (“FCA”) in connection with its participation in the Department of Housing and Urban Development’s (“HUD”) Home Equity Conversion Mortgage (“HECM”) program, which offers reverse mortgages to seniors that are insured by the FHA.  The government alleged that between August 2009 to March 2015, the company’s subsidiary — with the knowledge and support of the company — submitted false insurance claims for debenture interest from HUD when it failed to properly disclose that it had failed to meet the program’s 30-day appraisal deadlines.  The government further alleged that between July 2010 to October 2014, the subsidiary submitted false insurance claims to HUD for reimbursement of unlawful referral fees.

The lawsuit was initially brought as qui tam action by a former executive of the subsidiary.  The whistleblower will receive $5.15 million of the recovery in this case.  The DOJ’s Civil Division, the United States Attorney’s Office of the Middle District of Florida, and HUD’s Office of Inspector General and Office of General Counsel coordinated settlement efforts in the matter.