Guild Mortgage Company will pay nearly $ 25 million to resolve a federal investigation into allegations it knowingly violated program requirements on Federal Housing Administration-insured mortgages.
The Justice Department said Guild would pay the United States $ 24.9 million to resolve charges that it knowingly violated the requirements when it issued and underwrote FHA loans.
“Ensuring the integrity of federal loan programs is important to maintaining the financial strength of these programs,” said Acting Assistant Attorney General Jeffrey Bossert Clark of the Civil Division of the Department of Justice. “Together with our HUD partners, we have worked hard to hold FHA lenders accountable who knowingly and materially violate program requirements that help Americans realize the dream of homeownership. “
Participants in the FHA mortgage insurance program can create and underwrite mortgages without the government first reviewing the loans to ensure they meet the agency’s underwriting and origination requirements. However, lenders must follow FHA rules designed to ensure mortgages meet major credit and underwriting criteria.
The Justice Department alleged that Guild Mortgage knowingly approved ineligible loans which then defaulted, resulting in claims with the FHA for mortgage insurance. The judge also alleged that Guild failed to comply with program rules that require lenders to maintain quality control programs and failed to report the deficient loans it identified.
The case stems from charges brought by Kevin Doughterty, a former head of quality control at Guild, under the whistleblower provisions of the Misrepresentation Act. Dougherty will receive $ 4.98 million as his share of the government’s clawback.
“As this regulation demonstrates, we are committed to holding mortgage lenders accountable when they choose to abuse the integrity of vital government programs designed to help homeownership,” said US Attorney Robert Brewer . “We also commend the whistleblower for demonstrating, exposing these wrongs and working with the government’s investigative team.”
Guild Mortgage did not admit any wrongdoing in the settlement.