Blog Enforcement Watch March 16, 2016

New York Bank Settles False Claims Allegations with HUD for $300,000

On March 16, the United States Attorney for the Eastern District of New York, Inspector General for the Department of Housing and Urban Development (“HUD”), and Acting Inspector General for the Federal Deposit Insurance Corporation (“FDIC”) announced that the government settled a False Claims Act lawsuit against a New York-based mortgage lender, relating to the defendant’s Fair Housing Administration (“FHA”) lending.

As previously covered by Enforcement Watch, the complaint alleged that, for at least eight FHA loans, the lender conspired to funnel its own money through a purported charitable consumer counseling and relief fund, which would in turn make payments on the borrowers’ behalf so that they would not default.  This effectively concealed the lender’s high default rate from HUD.

As part of the settlement agreement, the lender and its president agreed to pay the government $300,000.