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DOJ Catch Of The Week -- M&T Bank

Posted  May 13, 2016

By the C|C Whistleblower Lawyer Team

This week’s Department of Justice “Catch of the Week” goes to Buffalo, New York-based M&T Bank Corp.   Today, the bank agreed to pay $64 million to settle charges it violated the False Claims Act by knowingly originating and underwriting mortgage loans insured by the Department of Housing and Urban Development’s (HUD) Federal Housing Administration (FHA) that did not meet applicable requirements.  Specifically, the government alleged that M&T Bank failed to comply with certain FHA origination, underwriting and quality control requirements.  See DOJ Press Release.

As part of the settlement, M&T admitted that from 2006 through 2011 it certified for FHA insurance mortgage loans that did not meet HUD underwriting requirements and did not adhere to FHA’s quality control requirements.  M&T also admitted failing to review an adequate sample of FHA loans, as required by HUD, as well as failing to adhere to HUD’s self-reporting requirements.  While M&T Bank identified numerous FHA insured loans with “major errors” between 2006 and 2011, M&T Bank did not report a single loan to HUD until 2008, and thereafter self-reported only seven loans to HUD.  As a result of M&T’s conduct and omissions, HUD insured hundreds of loans approved by M&T that were not eligible for FHA mortgage insurance and that HUD would not otherwise have insured.  HUD subsequently incurred substantial losses when it paid insurance claims on those loans.

In announcing the settlement, DOJ Civil Chief Benjamin C. Mizer made it clear the government “will continue to hold lenders accountable for knowingly submitting ineligible loans for FHA insurance.”  First Assistant U.S. Attorney James P. Kennedy Jr. for the Western District of New York more colorfully added: “This case demonstrates that when a financial institution takes such a detour, we will work to ensure that it does not bypass the consequences of that conduct.”

Tagged in: Catch of the Week, FCA Federal, Financial Institution Fraud, Housing and Mortgage Fraud,