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Housing and Mortgage Fraud

This archive displays posts tagged as relevant to housing and mortgage fraud. You may also be interested in the following pages:

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Question of the Week — Will Healthcare Settlements Continue to Dominate False Claims Act Recoveries?

Posted  07/24/19
Recent blockbuster settlements continue past trends: healthcare fraud has so far this year dominated FCA recoveries. During the first half of 2019, the Department of Justice (“DOJ”) secured over $750 million in settlements from False Claims Act (“FCA”) cases. And just past the mid-year point, total recoveries have nearly doubled due to a $700 million civil settlement ($1.4 billion total) entered on July 11th...

June 12, 2019

In connection with the development of the Lakeway Regional Medical Center in Texas, a number of individuals and entities have agreed to pay $1.1 million to resolve claims that they made false claims in obtaining a loan insured by the Federal Housing Administration under a HUD program that insures loans to build hospitals in underserved areas.  Pacific Medical Buildings LLC, PMB Lakeway LLC, RD Development Partners LLC, Lakeway Management LLC, J&L Rush Family Partnership LP, Jeff Rush, and Brad Daniel, were alleged to have delayed refunds to investors who had cancelled their investments in order to make it appear as if the project satisfied mortgage covenants regarding the cash on hand required to close the loan. The settlement also resolves allegations that the settling parties received impermissible distributions of project funds. DOJ

Default by Nursing Home Chain on HUD-Guaranteed Mortgage Highlights Potential for Fraud in Section 232 Program

Posted  06/3/19
Nursing Home with Elderly People
Last week, the New York Times reported on the collapse of Rosewood Care Centers, a chain of nursing homes with facilities in Illinois and Missouri. According to the report, the chain had faced years of operational and financial difficulties, including fines by state regulators, personal injury claims by residents, and lawsuits by investors and vendors. When it went under, Rosewood defaulted on $146 million in...

April 25, 2019

Morgan Stanley will pay $150 million to the State of California to resolve allegations under the California False Claims Act, Corporate Security Law and False Advertising Law, that the bank concealed the risk of residential mortgage-backed securities sold to the California Public Employees’ Retirement System (CalPERS) and the California State Teachers Retirement System (CalSTRS) between 2003 to 2007. CA

Catch of the Week — General Electric to Pay $1.5 Billion under FIRREA in Subprime Loan Scheme

Posted  04/12/19
general electric company logo on building
The Department of Justice today announced that General Electric will pay a civil penalty of $1.5 billion under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) to resolve claims of fraud involving the marketing of subprime residential mortgage loans.  The loans at issue originated by a GE subsidiary, WMC Mortgage.  The government alleged that WMC, GE, and their affiliates allegedly...

April 12, 2019

General Electric has agreed to pay $1.5 billion to resolve alleged FIRREA violations committed by its subsidiary, WMC Mortgage, in subprime residential mortgage-backed securities originated between 2005 and 2007. WMC had allegedly encouraged lax quality and fraud controls by compensating loan analysts based on the number of mortgages they approved, resulting in profits of $65 billion in the two-year period. An estimated 78% percent of WMC’s loans contained at least one piece of false information. DOJ

March 7, 2019

A landlord participating in a federally funded rent subsidy program for low-income tenants has agreed to settle allegations of violating the False Claims Act. In order to receive housing assistance funds from the Department of Housing and Urban Development (HUD), Harold Joseph Tyler of Tyler Realty Group had certified that he would not charge more rent than was agreed upon. According to a tenant who filed the qui tam complaint that launched the investigation, however, Tyler effectively charged additional rent in the form of a recurring "non-refundable deposit" of nearly $200 per month. USAO EDVA

Top Ten Federal Financial Fraud Recoveries of 2018

Posted  01/25/19
Wooden gavel and handcuffs on top of U.S. currency
While 2018 has been a banner year for FCPA, Tax, and SEC & CFTC recoveries, in the bottomless pit of financial frauds that hurt taxpayers, the government, consumers, investors, and the American economy, 2018 brought us additional stunning recoveries for violations related to residential-mortgage backed securities, international economic sanctions, consumer protection, anti-money-laundering, EB-5 investment fraud, and...

December 21, 2018

Mortgage servicing company Compu-Link Corporation, also known as Celink, will pay $4.25 million to settle a False Claims Act case alleging that it improperly obtained FHA insurance payments on reverse mortgages under the Home Equity Conversion Mortgages program despite knowing that the mortgagees in question were not eligible to receive the FHA payments.  USAO MD Fla

December 12, 2018

Finance of America Mortgage LLC has agreed to pay $14.5 million to the United States to resolve its liability under the False Claims Act in connection with deficient mortgage loans originated by a company it acquired. The acquired company, Gateway Funding Diversified Mortgage Services, L.P. (Gateway), had participated in the Federal Housing Administration's insurance program as a direct endorsement lender (DEL), which gave it the authority to originate, underwrite, and endorse mortgages with minimal oversight from the FHA. However, as reported by a former Gateway employee in a qui tam complaint, the company failed to comply with the stricter procedures required of DELs, including failing to conduct audits on early-payment default loans, repeatedly failing to correct high rates of default, and failing to self-report deficient loans to the FHA. For exposing the fraud, the unnamed relator will receive a share of $2,392,500. USAO NDNY
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