Missouri Mortgage Lender Agrees to Pay $2.4M to Settle Allegations It Defrauded Senior Mortgage Program
Yesterday, the DOJ announced that James B. Nutter & Company, a former mortgage lender from Kansas City, Missouri, agreed to pay $2.4 million to settle allegations it violated the False Claims Act by knowingly underwriting Home Equity Conversion Mortgages (HECM) that did not meet eligibility requirements.
The HECM program is essentially a reverse mortgage product for homeowners aged 62 and older that allows seniors to tap into their home equity and supplement their retirement income. Many seniors rely on programs like HECM to stay financially stable. Fraud within this program puts seniors’ financial well-being at risk, making them even more vulnerable at a time when security is most crucial.
In this case, Nutter allegedly broke program rules by using unqualified temporary staff to underwrite these Federal Housing Administration (FHA)-insured HECM loans and by submitting loans for FHA insurance with underwriter signatures that were falsified and/or affixed before all the documentation was complete.
Programs like HECM provide much-needed financial relief to millions of seniors across the country. Lenders are required to follow strict guidelines to ensure that only eligible mortgages are backed by the government. As U.S. Attorney Teresa A. Moore for the Western District of Missouri stated, “The integrity and resources of those important programs must not be put at risk by mortgage lenders who put their own financial interests first.”
As Brian M. Boynton, Principal Deputy Assistant Attorney General, also pointed out, “The HECM program helps support our nation’s senior citizens by providing an additional source of funds to supplement their income.” By allegedly violating the program rules, Nutter may have jeopardized the financial stability of seniors across the country.
Mortgage fraud impacts more than just the seniors who rely on programs like this. It has wider consequences for the housing market and the economy. Fraudulent loans can lead to defaults, which don’t just harm the homeowner and lender—they can destabilize the entire housing market.
The U.S. Attorney’s Office in Missouri emphasized that this case is an important step toward protecting FHA programs from abuse. By holding mortgage lenders accountable, the government helps preserve the integrity of programs millions of Americans depend on for homeownership and financial security.
Mortgage fraud, particularly when it targets programs that assist vulnerable groups like seniors, demonstrates why whistleblowing is essential to maintaining transparency and accountability within the financial sector. Stronger whistleblower protections, continuous oversight, and swift accountability measures can be essential to maintaining public trust in government programs.
If you may have any information of about potential fraud or misconduct and would like to speak to an experienced member of the Constantine Cannon whistleblower lawyer team, please do not hesitate to reach out and contact us for a free consultation.