Blog Enforcement Watch October 23, 2018

DOJ Settles with Mortgage Lender for $13.2 Million Concerning FHA Mortgage Certifications

On October 19, the Department of Justice (DOJ) announced that it settled allegations that a Florida-based mortgage lender violated the False Claims Act (FCA) ​by falsely certifying that it complied with Federal Housing Administration (FHA) mortgage insurance requirements for certain loans originated between 2006 and 2011 for $13.2 million.

In the lawsuit, which was filed by a whistleblower and is pending in the District Court for the Western District of Washington, the Complaint alleged that the lender participated as a direct endorsement lender in the U.S. Department of Housing and Urban Development’s (HUD) FHA insurance program.  The Complaint specifically alleged that the lender knowingly submitted FHA loans for insurance that did not qualify, improperly incentivized underwriters, and knowingly failed to perform adequate quality control reviews.

The settlement was the result of a whistleblower lawsuit and joint investigation conducted by HUD, HUD’s Office of Inspector General, DOJ, and the U.S. Attorneys’ Offices for the Eastern and Western Districts of Washington.  The whistleblower will receive $1.98 million from the settlement.