The United States Department of Justice, on behalf of the Department of Urban Housing and Development, said another two lenders allegedly violated the False Claims Act by “knowingly originating and underwriting mortgage loans insured by HUD’s Federal Housing Administration that did not meet applicable requirements,” reports HousingWire staffer Brena Swanson.
Primary Residential Mortgage Inc. and SecurityNational Mortgage Company, each located in Salt Lake City, Utah, announced separate agreements with the DOJ to pay $5 million and $4.25 million, respectively, to resolve allegations that they violated the False Claims Act.
BB&T was the most recent lender to violate the False Claims, which is designed to prosecute vendors the government feels fraudulently represented themselves while doing business with the nation.
Here is what both lenders admitted to:
PRMI admitted it endorsed loans that were not eligible for FHA mortgage insurance, including loans where:
- PRMI failed to document the assets used to qualify the borrower for FHA mortgage insurance and omitted liabilities owed by the borrower from the underwriting analysis;
- PRMI failed to document income used to qualify the borrower for FHA mortgage insurance;
- PRMI failed to verify the borrower’s earnest money deposit; and
- The borrower was delinquent on a second, pre-existing FHA mortgage.
SecurityNational admitted it endorsed loans that were not eligible for FHA mortgage insurance, including loans where:
- The borrower was delinquent on federal debt and had an unpaid court-ordered judgment;
- The borrower was four months delinquent on the underlying mortgage SecurityNational refinanced into an FHA loan;
- The mortgage loan amount exceeded HUD’s loan to value requirements;
- SecurityNational failed to document income used to qualify the borrower for FHA mortgage insurance; and
- SecurityNational failed to analyze the borrower’s delinquent credit history.