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IBERIABANK to Pay Over $11.6 Million to Settle False Claims Act Allegations

Posted  December 11, 2017

By the C|C Whistleblower Lawyer Team

The Department of Justice announced Friday that IBERIABANK Corporation agreed to pay $11,692,149 to resolve allegations that they violated the False Claims Act. The allegations centered on certifications of compliance with Federal requirements to obtain insurance on mortgage loans from the Federal Housing Administration. IBERIABANK is a Louisiana corporation that has branches all across the southeastern United States.

According to DOJ, IBERIABANK participated as a direct endorsement (“DE”) lender in the FHA insurance program. DE lenders can originate, underwrite, and endorse mortgages for FHA insurance. This allows lenders to who have endorsed mortgages for FHA insurance to bring an insurance claim to the Department of Housing and Urban Development (“HUD”) in the event a loan defaults. DE lenders are required to follow federal rules to ensure they are properly underwriting and certifying mortgages. The DE lenders then certify the mortgages comply with FHA requirements.

Between 2005 and 2014, IBERIABANK allegedly paid incentive payments to underwriters, which is prohibited by federal regulation. HUD had informed IBERIABANK in 2010 that it was not in compliance with the underwriter commission prohibition. IBERIABANK allegedly told HUD that it was no longer paying the commissions but did not disclose to HUD that it continued to pay underwriters incentive payments through 2014. The result was that HUD insured loans approved by IBERIABANK that were not eligible for FHA insurance under the federal regulations.

The allegations came to the government in the form of a qui tam lawsuit by former IBERIABANK employees Kelley R. Shackleford and Karen Mills, who were employed at an IBERIABANK branch in Little Rock, Arkansas. Jeremy Kirkland, Acting Deputy Inspector General, HUD Office of Inspector General said  “It is troubling when financial institutions, who have fiduciary responsibilities and are expected to conduct themselves as honest brokers, wrongfully exploit federally funded programs.”

Tagged in: FCA Federal, Housing and Mortgage Fraud, Whistleblower Case, Whistleblower Rewards,