A Tulsa, Okla.-based mortgage lender has agreed to pay $2.47 million to resolve allegations that its predecessor knowingly originated and underwrote hundreds of Home Equity Conversion Mortgage (HECM) loans insured by the Federal Housing Administration (FHA) that did not meet critical Department of Housing and Urban Development (HUD) requirements.
Finance of America Reverse (FAR) will pay $1.97 million to resolve False Claim Act claims and an additional $500,000 to HUD to resolve its administrative liability. FAR acquired Urban Financial Group Inc. in 2013.
Urban Financial violated FHA requirements for HECM loans prior to May 1, 2010, by using a form that provided appraisers with the loan amount and otherwise improperly communicating certain information when ordering appraisals in an attempt to influence the appraised value, according to the Department of Justice (DOJ).
“The department is committed to working with HUD to protect vital lending programs such as the FHA’s HECM program,” Assistant Attorney General Jody Hunt of the DOJ’s Civil Division said in a news release. “We will hold accountable those FHA lenders that knowingly and materially fail to abide by their promises to HUD.”
U.S. Attorney Timothy J. Shea of the District of Columbia added, “This settlement sends a clear message that we will not tolerate fraud against programs designed to financially help our nation’s seniors.”
HUD Inspector General Rae Oliver Davis said the Office of Inspector General (OIG) will continue to work with HUD “to ensure that FHA lenders are not engaged in unlawful practices that increase losses to HUD’s insurance funds and threaten the viability of HUD’s mortgage programs.”
The DOJ noted that the HECM program relies heavily on lenders using reliable and accurate appraisals to approve loans for FHA’s mortgage insurance.
The matter was investigated by the Commercial Litigation Branch of the DOJ’s Civil Division, the U.S. Attorney’s Office for the District of Columbia, HUD, and HUD’s OIG.
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