Lenders, Title Company Agree To Fork Over $8.9M To Settle Allegations Of Screwing Over FHA-Insured Loan Program By Submitting False Claims

In two unrelated cases, the U.S. Justice Department has recently settled civil lawsuits brought against two financial institutions and a title company for allegedly screwing over the FHA-insured mortgage loan program.

In one case, the U.S. Attorney for the Eastern District of Michigan announced:

• The Department of Justice announced [...] that National City Mortgage, Inc. has agreed to pay $4.6 million to settle allegations arising under the False Claims Act concerning fifty-eight federally insured loans for mortgages submitted to the Department of Housing and Urban Development (HUD). [...] The United States alleges that National City improperly submitted fifty-eight late endorsement loans for FHA insurance coverage which were already "in default" prior to their submission, in violation of the FHA regulations.

For more, see U.S. Attorney press release: $4.6 Million Settlement with National City Mortgage, Inc. Involving Federally Insured Mortgages.

In a second case, the U.S. Attorney for the District of Arizona announced:

• The United States reached a civil settlement with Wells Fargo Bank and Ticor Title Agency of Arizona. In the settlement, Wells Fargo Bank has agreed to pay $4,046,786 and Ticor Title has agreed to pay $265,370.

• Under certain circumstances, the Federal Housing Administration’s “pre-foreclosure sales” program allows homeowners with federally-insured loans to avoid foreclosures by listing their homes for sale. If a sales price is not enough to pay-off a loan, then the lender submits an insurance claim to the Federal Housing Administration which will pay the lender the balance owing on the loan.

• The United States contends that Wells Fargo Bank submitted more than 70 false claims to the Federal Housing Administration under the pre-foreclosure sales program and that Ticor Title prepared inaccurate escrow documents which allowed lenders to submit false claims to the Federal Housing Administration. [...] Wells Fargo Bank and Ticor Title deny the United States’ contentions but agreed to pay the amounts listed above.

For more, see U.S. Attorney press release: United States Reaches $4.3 Million Settlement With Wells Fargo Bank And Ticor Title.