Former Mortgage Lender Settles with DOJ to Resolve HECM False Claims Allegations

The DOJ recently settled a lawsuit alleging Home Equity Conversion Mortgage (HECM) underwriting violations against a former mortgage lender for $2.4 million.  The lawsuit was filed in September 2020 on claims made under the False Claims Act and the Financial Institutions Reform, Recovery and Enforcement Act for alleged underwriting non-compliance from January 2007 through December 2010.

The DOJ alleged that the lender’s knowing violation of HECM underwriting requirements resulted in claims for FHA insurance on those HECMs.  The violations allegedly included using inexperienced temporary staff to underwrite the loans and falsifying underwriter signatures on submitted loans or inaccurately affixing underwriter signatures to submitted loans before loan file review was complete.  The lender did not admit liability.