US Attorney Reaches $3.67 Million False Claims Act Settlement with California-Based Mortgage Company Concerning FHA Loans

On February 13, 2019, the U.S. Attorney for the Eastern District of California announced an agreement with a California-based mortgage company to resolve alleged violations of the False Claims Act (FCA). The U.S. Attorney’s Office alleges that between April 2007 and June 2009, the mortgage company underwrote and originated 16 loans and then falsely certified the loans were eligible for the Federal Housing Administration (FHA) mortgage insurance program.

The mortgage company was a participant in the U.S. Department of Housing and Urban Development’s (HUD) Direct Endorsement Lender program. This program allows authorized lenders to certify the mortgages they underwrite, originate, and endorse qualify for FHA mortgage insurance. According to the U.S. Attorney, the lender’s false certifications caused HUD’s FHA insurance program to pay claims that it would not otherwise have paid when the loans defaulted. Pursuant to the settlement agreement, the mortgage company must pay $3,670,000, of which $1,924,405.56 is designated as restitution.

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