FHA to Reduce False Claims Act use in FHA Lending

Multiple sources have reported that FHA Commissioner Brian Montgomery recently stated that the Trump administration wants to curtail the use of the False Claims Act to bring more lenders back into FHA lending.  Montgomery noted that big banks particularly have greatly reduced their participation in FHA programs due to the use of the False Claims Act to obtain large settlements.  He indicated that FHA lenders want more certainty around what the bright line is regarding compliance issues, and that enforcement of FHA lending could be brought back under FHA, giving the Agency a role in determining enforcement actions.  Though he indicated that FHA would not look the other way on fraud or misrepresentation, Montgomery stated that he believes increased certainty regarding FHA lending requirements, combined with a decreased threat of a government action under the False Claims Act, will bring more lenders back to FHA programs which will also benefit consumers.